Economics: Mineral Resources

Mineral Resources

It is one of the important natural resources. Gold, copper, coal, gas, limestone, etc which are found in the womb of the earth are called mineral resources. The department of mines was established to explore and exploit the mineral resources. It is responsible for studies, evaluation, extraction and development of mineral resources. The contribution of minerals industry to the GDP is estimated at about 0.02.

Importance of Mineral Resources

1. Industrial development
   Different kinds of equipment and heavy machinery needed for industries are made from a mineral resource. The energy needed for industries such as petrol, diesel, kerosene and coal are also supplied by mineral resources. Mineral resources also console the raw materials bases for industries.
   
   
2. Agricultural development
   Mines provide materials for the adoption of improved technology for agricultural development. Metals are used in the manufacture of agriculture tools and implements like shade, machines and irrigation equipment for agriculture development.
   
   
3. Source of foreign currency earning
   If Nepal could extract large quantities of minerals and export then it can earn a large amount of foreign exchange. Nepalese have an extensive market overseas and have the potential to earn foreign currency.
   
   
4. Sources of energy
   The extraction of minerals such as natural gas, diesel, petrol and kerosene can be used to meet the growing energy demand. It may replace the import of these products and thus save the valuable foreign exchange.
   
   
5. Development of self-dependency
   Nepal is totally dependent on foreign countries for every type of machinery, tools, equipment, utensils and machinery parts and even for manufactured needles. If we can explore and use our mineral resource to produce these goods in our own country, we would be independent in this regard. It would also stop the outflow of domestic capital and would correct unfavourable balance of trade as well.
   
   
6. Accelerate the process of capital formation
   Maximum exploration and utilization of mineral resources need a large amount of capital investment. If an initial investment of the huge amount of capital could be made the establishment of small, medium and large scale industries could be ensured. Establishment of such industries would encourage the process of further capital information which would help in utilizing the mineral resources further.

Problems of Mineral Resources

Although Nepal is rich in resources there is difficulty in a mobilization of such resources as Nepal is the poorest country in the world. Some of the major problems are listed as below:

1. Lack of Advance Technology
   The optimum utilization of mineral resources requires advanced technology, modern equipment, and efficient technicians. But the availability of highly skilled and experienced technicians are adequate. That is why the development of mineral resources has not got a momentum.
   
   
2. Lack of Infrastructure
   Transportation and communication are an essential infrastructure for the development of a nation. But such facilities are unavailable in Hilly and Himalayan region, a place where major of mineral deposits are supposed to have been located.
   
   
3. Lack of Finance and Investment
   Exploration and exploitation of mineral resources are mainly based upon capital intensive techniques. The rate of capital formation in Nepal is very low. The shortage of such capital has become the greatest problem in Nepal.
   
   
4. Limited Scope of Market
   Nepalese economy is far behind than that of the neighbouring countries in the matter of extraction and exploitation of minerals. Its product has to face strong and unfair competition with the products of India and China in terms of price, quality and quantity.
   
   
5. Defective Government Policy
   The government has not been able to formulate any appropriate mineral policy. The existing mineral acts and regulations are either vague or inadequate. The government has not adopted any policy regarding minerals resources whether to allow private participation or involve foreign for exploration and exploitation.
   
   
6. Expensive and Inadequate Supply of Energy
   The supply of energy (electricity and petroleum products) in Nepal is inadequate as well as expensive too. So the available minerals remain unexplored and unutilized as it requires the modern technical equipment, tools and machinery.