3. Mobilising the potential of Andalusia’s mining value chain

Metallic mining and transformation

Andalusia’s metallic mining goes back hundreds of years and in its long past has seen many cycles of booms and busts.1 In its current shape, starting in the early years of the century, Andalusia has seen a slow but steady rebirth of its metallic mining, with a geographical focus on the Iberian Pyrite Belt (IPB), in the provinces of Huelva and Seville. More recently, there has also been renewed activity in non-IPB deposits, such as the iron ores from the Sierra Nevada region, in the province of Granada. The region benefits from a rich stock of metallic mines and projects (Table 3.2).

The Andalusian metallic extractive sector produces a small but growing array of valuable mineral products. The main products, by volume, are copper concentrates and cathodes, followed by zinc concentrates and metallic lead. As to future production, together with an increase in the volumes of current mineral commodities – several of the projects in the pipeline are in advanced stages of development – there is an expectation that Andalusia may extract a wider mix of metals from its deposits. For example:

• The Cobre Las Cruces polymetallic refinery project is being designed to produce lead, silver and zinc, in addition to copper.

• Tharsis Mining and Metallurgy’s Tharsis and La Zarza mines are expected to produce cobalt and gold respectively.

• Minas del Alquife’s project in Granada (Minas del Marquesado mine) is reported to be on the verge of obtaining its first iron ore export permits.

Non-metallic mining and transformation

The non-metallic (NM) extractive sector in Andalusia is composed of the following subsectors (Spanish National Government, 2020[3]):

• Aggregates and construction rocks. The products with greater value of production are limestone, dolomites, and gravel and sands. Other products include siliceous sands and non-ornamental sandstone and marble.

• Industrial minerals. Gypsum, siliceous sands and salt are the main products in this subsector. The regional production of gypsum is the largest in Spain (67% in 2018) and a referent for Europe. Other products with a lower value of production include clays for structural ceramics, carbonates (for cement), fluorite (used in metallurgy as a flux), strontium and industrial iron oxides.

• Ornamental rocks. Marble is the main product in terms of the value of productions. Other products include sandstone and slate.

The NM extractive sector is relevant in multiple ways for the economic fabric of Andalusia (Table 3.3). The combination of geographical dispersion and a relatively large number of companies and employees places the NM sector as an important engine for rural development in the region. Mines of NM are highly dispersed across the territory and the ecosystem is composed of a large number of companies (98% of all extractive establishments are NM) that represent an important source of income and jobs for rural communities (44% of all extractive industry jobs in Andalusia fall within the NM sector). These companies are in general small local family businesses (with an average of 6.8 employees per establishment).

The geographical distribution of NM mines and transformation sites varies according to the type of mineral. Production sites of aggregate minerals are relatively dispersed across the territory, while the extraction and transformation of industrial minerals and ornamental rocks are rather concentrated in Almería. The greater concentration of the last two types of minerals represents relevant sources of growth for specific municipalities. In industrial mineral, gypsum, for example, is mainly located in the area of Sorbas-Tabernas in Almería and to a lesser extent in Cádiz, Granada and Seville. In terms of marble, its production is mainly located in Sierra de Macael, Almería.

The geographical concentration of some of these minerals, make this sector highly important in cultural and social terms. Many of those communities identify themselves with this type of mining and have built know-how and history around it. One of the sectors with the most identity and history is the ornamental marble industry of Almería (Box 3.3). Andalusia host around 44% of the total number of jobs in the Spanish marble extraction sector (2018), of which 90% are located in Almería (Spanish National Government, 2020[3]). More than 80 families exploit and transform marble in Sierra de Macael in Almería, making this sector the main economic activity of the area.

Benefitting from the mining proximity to cities

The fact that Andalusia’s mining potential sits close to large urban centres is another feature that should be considered among its strengths. In many mining jurisdictions in the world, mining occurs in remote and isolated areas (the Pilbara region in Australia, the Arctic Circle in Canada, Finland or Sweden, or the high Andes in Chile and Peru). In contrast, mining in Andalusia takes place in generally mild climates, at low altitudes and within easy reach of many urban centres. The CLC mine is barely 30 minutes (30 km) away from Seville (1.9 million inhabitants), while the Aguas Teñidas and Riotinto mines are a little more than an hour’s drive (75 km) from Huelva (524 576 inhabitants).

This practically unique situation brings to Andalusian mining the bonus of not having to operate in isolation, which is so common to many mining projects. Logistics, stocks, health, safety and personnel matters are all greatly simplified by having large urban centres closely at hand. This also facilitates the exchanges with universities, technological centres and public bodies as well as with suppliers from various economic sectors. The historical proximity to urban centres should also be showcased internationally to attract investors and high skilled workers that want to benefit from the amenities offered by cities. Furthermore, such closer interaction with cities is an opportunity to help improve the community perception towards mining and prove that mining can be done harmoniously with other economic activities and people’s lives.

Yet, this proximity may affect cities and their functionality as well as create land use conflicts. Without proper management, some of the negative environmental externalities created by mining can be accentuated when operations are close to cities. Dust from exploitation, mineral transportation, visual pollution, water management and conflicts on the use of land are just some of the issues that can create conflicts among mining activities and people and businesses in neighbouring cities. These challenges could ultimately reduce the attractiveness of the region and affect social perception for mining ventures.

Improving the linkages among cities and mining can boost the competitiveness of the mining value chain and make the region more attractive for people and firms to enjoy the advantages of a city while working in the mining sector. To make the most of this proximity, Andalusia should ensure urban planning and infrastructure plans are co-ordinated with mining development plans. This involves encouraging co-ordination with municipal land use plans and alignment with the local vision/needs of urban development (parks, recreational spaces, etc.) by including citizens’ opinion in the co-ordinating plans.

Making the most of infrastructure for mining development

Mining requires certain essential infrastructure if it is to develop its full potential, including roads, railroads, airports and ports for the inward flow of raw materials and personnel, as well as for the industry’s outward flow of products. A reliable energy supply, both in the form of generation and transmission capabilities, is also a key element to power mining operations and processing plants. Likewise, communication and IT networks, particularly high-speed broadband, is increasingly a need for mining, allowing remote operations and automation transition. Missing items in essential infrastructure can penalise the mining attractiveness of a region, as a certain number of projects cannot be brought to production in economic terms.

Fortunately for Andalusia, its starting point in many of the infrastructure requirements is a strong one:

• Roads and the railroad network. Good density of roads (311 km of roads per million inhabitants, which would rank it 4^th compared to EU countries. For firms and people, high-speed railroads connect Andalusia’s main cities (Cadiz, Cardoba, Granada, Malaga and Seville) to Madrid in approximately 2.5 hours.

• Ports and airports. Good density of commercial ports (10 ports in the region) with Algeciras as the largest Mediterranean port in terms of container traffic. Five airports with international flights and airborne cargo volumes increasing in Almeria and Seville airports.

• Logistics hubs. Andalusian logistics infrastructure is part of two Trans-European Transport Network (T-ETN): Atlantic (Lisbon-Strasbourg) and Mediterranea.

• IT communications. As documented in Chapter 2, the region has a good penetration of broadband services (92% of households with at least 2-10 Mbps services).

• Power generation, transport and distribution. A diverse and potent mix of energy sources, with a high proportion of renewables (39% of total Andalusian power generation). Power lines that include connections with Portugal and Morocco.

The diverse and export-oriented mining industry in Andalusia makes infrastructure a key area to improve sectoral productivity. Metallic and NM mining companies use railroads and trucks to move their products to production sites and ports. For many products, especially NM, transport costs account for an important share of final value. Improvement in transport efficiency, including quality of roads and railroads, as well as waiting times at the port, can thus boost the international competitiveness of the sector.

Nevertheless, work remains to be done to enhance infrastructure and take full advantage of opportunities associated with mining development. There has been little to no significant new investment in railroads and the interconnectivity between main ports and railroad network has scope for improvement. Likewise, there is a slow execution of key public investment plans for the development of the T-ETN (especially the Algeciras-Bobadilla-Madrid railroad connection).

Furthermore, broadband coverage in the region is of relatively lower speed when comparing with other mining regions (Chapter 2). Deployment of high-speed broadband should be a strategic target for the government if the region aims to seize the benefits of digitalisation to remain competitive and help reduce carbon emission in its mining process (automation of mines).

Despite the chief relevance of transport for this sector, there seems to be a lack of co-ordination among infrastructure plans and mining strategies within the region. The regional government’s Transport Infrastructure Plan and the Energy Plan do not consider the Andalusian Mining Strategy 2020. Greater co-ordination with infrastructure strategies is not only needed for the competitiveness of the mining sector but also to avoid disruptions with other economic activities that rely on regional infrastructure (tourism and agriculture). This overall co-ordination should also help ensure the effective access of raw materials (e.g. aggregates and construction rocks) to infrastructure developments in the region.

Greater regional and national government co-ordination around infrastructure is also needed, as the main railroad network, port and airports are under the national government jurisdiction. For example, when it comes to airports, Andalusia is responsible solely for smaller airstrips and heliports facilities and, in ports, the region is in charge solely for recreational and small/artisanal fishing ports.

Strategic infrastructure projects with high potential for mining development need important support from all levels of government. For example, the reopening of strategic railroad segments, including the Andalusian-Portuguese link through Huelva-Ayamonte-Faro, in the Atlantic Corridor can create the conditions for collaboration with Portuguese mining regions. Improving government co-ordination among infrastructure and mining projects and with national government plans should be a relevant strategy for Andalusia as it could benefit growth and environmental outcomes in the region. Chapter 4 will further outline policy recommendations to improve multi-level governance co-ordination.

In summary, relevant actions that the regional government should undertake to improve its infrastructure include:

• Seeking to understand the NM and metallic mining sector’s current and future infrastructure requirements, to facilitate co-ordination with regional and national infrastructure, urban, land use and business plans. This co-ordination should aim to increase the efficiency of transport (e.g. times) of raw materials and align mining projects with improvements and new developments of infrastructure.

• Explore opportunities to associate more closely with Portugal for the joint development of the IPB and leverage this linkage to secure European funding or prioritisation of infrastructure works in the IPB (Chapter 4).

A region with a strong mining identity

Spain stands out thanks to a better community perception of the employment benefits from mining relative to other European mining countries, including Finland and Germany (INFACT, 2018[23]). According to the INFACT survey, which gathered more than 3 000 citizen responses, 60% of Spaniards showed an attitude between neutral and positive towards mineral exploration, Moreover, 95% of the inhabitants from mining municipalities would accept mineral exploration initiatives if they lead to an effective revitalisation of the economic activity of the region.

At the regional level, Andalusia benefits from greater community perception among Spanish regions. This is particularly the case of traditional mining communities in the IPB (Requejo Liberal, Blázquez Gómez and Del Río Orduña, 2018[24]). Despite the impact on perception after the environmental disaster in the Aznalcóllar mine at the end of the 1990s, Andalusian communities kept recognising the benefits mining has brought to the local economy. Moreover, since mining investments worldwide tend to concentrate in geologically promising regions that are also viewed as mining-friendly, the outside world’s consideration of the mining attractiveness of a given jurisdiction is likewise crucial.

Concrete actions from local governments have helped support a positive citizens’ perception of mining. For example, in 2019, the mayors of the seven municipalities that make up the Rio Tinto Mining Basin, together with the members of Atalaya Mining’s enterprise committee, agreed to ask the Junta de Andalusia to expedite the resolution of the Unified Environmental Authorisation (AAU) in 2019 as part of joint action in favour of mining in the region. The political representatives of the municipalities highlighted the generation of employment and economic prosperity in the surrounding municipalities where mining takes place (Huelva Información, 2019[25]).

Private companies have also conducted a number of programmes to increase the well-being and income of local communities. For example, CLC has conducted corporate social activities to support the diversification of the local economy, which has contributed to maintaining the mining identity. Other practices have aimed to enhance local training and education, including the Holcim Chair for Sustainable Construction project launched by Holcim and the School of Architecture (ETSA) of the University of Seville (US) to promote interdisciplinary teaching and research activities that study the reality, problems and prospects of sustainable construction. These practices can be enhanced and better co-ordinated by linking them with regional development programmes, to ensure a sustained impact at the local level and help strengthen the perception of mining effects on local development.

Nevertheless, automation and climate change undermine the positive perception

Despite the positive perception of mining in Spain and Andalusia relative to other jurisdictions, there is a need to better inform social perception (INFACT, 2018[23]). Economies with a high degree of specialisation in manufacturing and mining could face important risks of job displacement, as this sector contains a high proportion of repetitive tasks. This can undermine the benefits mining has on local employment. In parallel, the increased flow of information on the environmental effects of mining along with greater societal awareness and political will for environmental protection is boosting concerns with regards to mining ventures. These aspects can threaten the community support for mining in Andalusia.

The above-mentioned survey on perception concluded that social perception is not based on sufficient information to form a solid opinion. Andalusians are not fully aware of the role of mining in the economy and the relevance of raw materials for economic sustainability. Further, not all civil actors share the positive vision of mining, since certain civil organisations (Amigos de la TIerra, Ecologistas en Acción, Greenpeace, SEO/BirdLife and WWF) emphasised in 2018 the environmental dangers associated with mining, with the Aznalcóllar spill catastrophe as a stark reminder, even after more than two decades.

In fact, in spite of a generally welcoming approach, the community lacks information on some basic aspects of the industry including, among others: the relevance of raw materials to attain climate neutrality (Chapter 4), the economic relevance of mining for regional and national development and the environmental, social and technical standards currently applied to and by the industry.

Without a consistent citizen information strategy involving all actors and aiming to boost perception, a misinformation campaign on mining impacts could have a major influence on public opinion. One of the strategies to help modernise the image and perception of mining is with sound mining branding (Chapter 4). This branding should not only focus on the extraction but rather stress the benefits that mining brings to the economy as well as the technological advances that help make progress towards a low-carbon economy among other things. Chapter 4 explores in more detail the branding of the mining industry in Andalusia.

In order to mobilise the community and materialise the region’s long-time support of mining development towards regional development, the regional government of Andalusia should:

• Involve all stakeholders in the design of the mining strategy, including citizens, universities and environmental groups (Chapter 4 elaborates more on this).

• Integrate public interest groups in mining venture proposals from the beginning. Legitimacy and trust are gained through transparency, fundamentally by giving all parties involved a voice and an inclusive role throughout the mining venture process (see the last section in this chapter).

• Encourage discussion between the community that supports mining and those that are reluctant. A sustainable mining community resides in the capacity of dialogue between all stakeholders. Dialogue sessions among citizens can be hosted in the Mining Hall every two years and before every project. Anti-mining interest groups could be engaged through citizen-to-citizen invitation and by partnering with universities for those fora. The experience of “Mining with other eyes” in Chile can be a guide for Andalusia (Box 3.6).

• Link regional development programmes with mining companies’ social responsibility programmes in local communities. This involves complementing existing private programmes with communication strategies and co-ordination with regional programmes to scale up the projects in the community.

A weak innovation system around Andalusia’s mining value chain

For many historical industrial and mining regions, such as Andalusia’s mining provinces, the knowledge and skillset required to produce and compete in the context of the data-driven economy would necessitate a radical change from existing capabilities. Supporting innovation in mining is a matter of stimulating strong innovation-based development in Andalusia. It has been repeatedly found that innovative regions tend to come up with new value-adding ideas and create new businesses based atop of their existent knowledge space and industrial configuration (Boschma and Frenken, 2010[29]). Mining regions, therefore, tend to advance their innovative capacity in ways related to an existing set of knowledge and skill.

Andalusia does not fare very well in terms of innovation performance compared to similar European regions. In terms of patents, Andalusia ranks unfavourably compared to Spain and other benchmark mining regions (Chapter 2). While it must be noted that patents may be a poor proxy for business innovation when it comes to service-based economies such as Andalusia’s, other multifactor measures also reflect a low innovativeness performance in the region.

The EU multifactor innovation index shows how Andalusia’s composite index is only half of the European average (Figure 3.1). The indicators that best represent business innovativeness – for instance, product and process innovators, in-company innovating and inter-firm collaborative innovation – all represent Andalusia’s poorest scores. According to this innovation index, Andalusia barely reaches a third of the European average for these innovation categories.

Innovation in Andalusia is mostly driven by government spending, public organisations and higher education institutions. In fact, the factors most indicative of the region’s innovation are linked to public sector R&D expenditures, scientific publications and higher education (see Figure 3.1). Despite some of the innovative industrial companies, including mining companies such as CLC or Cosentino (Box 3.2 and Box 3.3), the levels of patenting and R&D expenditure from the private sector are below the average regional innovation index.

Figure 3.1. Andalusia regional innovation performance, RES Scoreboard by indicator, 2019

Note: 100 = European country average.

Source: EC (2020[30]), RIS 2019 (database), https://ec.europa.eu/docsroom/documents/36081 (accessed on 23 February 2020).

Despite opportunities in the mining sector, little entrepreneurial activity is oriented towards extractive industries

Furthermore, the large majority of nascent entrepreneurs in Andalusia declare that their ventures do not generate innovations of any kind: no new products or services or innovative features thereof, no use of any novel technologies, no process innovation, nor market development (Spanish Entrepreneurship Observatory Association, 2020[31]).

In the specific case of entrepreneurial activity centred towards the Andalusian mining industry, new venture creation is relatively under-represented. Despite the growth of the mining sector over recent years, the proportion of the regional business creation within the extractive industries is relatively low, with most business creation happening in tourism and non-tradeable (stores, restaurants) services.

The growth of business creation around mining is in fact pretty low for the weight of Andalusia’s mining in the country (Figure 3.2). The regional’s mining entrepreneurial activity in 2019 was less than half of the Spanish average, despite the fact that this national average is pulled down by those regions in Spain with relatively marginal mining sectors. If compared with the sectoral distribution of entrepreneurial activity in other comparatively strong mining nations, the importance of Andalusia’s extractive sector-based entrepreneurship is only a fraction of that commonly seen in these countries.

Figure 3.2. Entrepreneurial activity rate in the extractive sector

Measured as the share of total entrepreneurial activity rate in the extractive sector

Note: 2018 data, except for Australia and South Africa, which is from 2017. Entrepreneurial activity is defined as the percentage of working people between 18 and 64 years old, with initiatives in the take-off phase between 0 and 3 months of activity, or in the consolidation phase between 3 months and 3.5 years.

Source: Spanish Entrepreneurship Observatory (2020[31]), “Situation of entrepreneurship in Andalusia in the face of the COVID-19 crisis”, https://www.gem-spain.com/wp-content/uploads/2020/10/Informe-GEM-covid19-andalucia.pdf.

Low levels of innovation reflect a lack of effective channels for collaboration within Andalusia’s mining system. On the one hand, greater competency exchanges must be channelled from multinational firms through to METS providers and across local companies of all sizes. The region’s knowledge space relies on external sources or its few dominant leading firms for innovation, with very little innovativeness percolating out of the region’s wider value chain. On the other hand, local universities and research centres need to improve their collaboration with the local business ecosystem to spur ideas and make them sustainable (Government of Andalucia, 2020[32]).

Furthermore, as depicted in Chapter 2, the region’s human capital in term of educational attainment, which is essential for innovation, falls below Spain’s national average, with the mining province of Huelva scoring some of the lowest levels in the region. For local innovativeness to take hold, the region needs to strengthen its innovation ecosystem by:

• Promoting service innovation through the mining value chain to unlock new business opportunities and innovation capabilities.

• Boosting the role of the third sector to support innovation and entrepreneurship around mining.

• Improving human capital to unlock high-value-added activities around the mining value chain.

Promoting service innovation in mining for a strong innovative regional system

The mining value chain demands a number of goods and services from the local economy that can be properly channelled to trigger innovation spill-overs for regional businesses. According to an OECD study (2020[33]), out of a sample of 66 countries, 28% of the value-added of mining exports came from different domestic sectors, including services, energy, manufacturing and the agricultural industry. Out of all sectors, services represent most of the backward linkages with mining (18%) (Box 3.7).

The value-added of mining in Andalusia, as in many mining jurisdictions, comes mainly from the sector itself, while the other economic activities adding value to this sector are locally sourced (Figure 3.3). According to the input-output table for Andalusia, the extracted minerals are themselves the main inputs of the final value-added of the mining sector (87% from metallic and non-metallic minerals in 2016). This share is slightly higher than the average across the 65 countries analysed in the OECD (2020[33]) study (Box 3.7), which underlines an opportunity for the region to add greater value to its raw materials. Positively, most of the other inputs that add value to the sector’s output are mainly obtained from local activities. Support services for extractive industries is the third activity that provides more value-added to the sector (6%), and it is mainly sourced from companies in the region (95% domestically sourced). Other relevant activities for the value added of the sector are domestic wholesale trade services (food process, rubber and plastic products) and R&D services.

Figure 3.3. Inputs to the Andalusian mining extractive industry, 2016

Inputs to mining value-added on basic prices

Note: Others include: glass and stone products, cement, energy minerals and fossil fuels, among others.

Source: Based on Institute of Statistics and Cartography of Andalusia (2017[34]), Andalusia Input-Output Framework, http://www.juntadeandalucia.es/institutodeestadisticaycartografia/mioan/ (accessed on 15 December 2020).

Box 3.7. The relevance of services in the mining value chain

Based on the 2018 Trade in Value Added (TiVA) dataset that comprised 65 countries, the OECD traced value addition into and out of the mining sector throughout the entire value chain. In analyses, backward linkages refer to upstream sectors that provide inputs to the mining sector. Forward linkages refer to downstream sectors that integrate outputs from the mining sector into their production processes.

The analysis found that much of the value-added of mining exports came from the sector itself (59% in 2015). This is due to the inherent value of the minerals extracted, plus the value addition of labour and capital expenditures in the sector. The sector in which mining displays the strongest backward linkages is services, representing 23% of the value-added of exports from the mining sector on average. In Central Asian and European countries, services account for 26% of the value-added of minerals exports. In almost all regions, a large majority of services to the mining sector are produced domestically, accounting for 18% of the value-added of mining exports.

Figure 3.4. Backward linkages, mining sector, 2015

Inputs by sector into mining

Source: Korinek, J. (2020[33]), “The mining global value chain", https://doi.org/10.1787/2827283e-en.

In this context, promoting innovation through services can stimulate industrial firms to introduce value-adding services into their operations. This process, sometimes called territorial servitisation (Lafuente, Vaillant and Vendrell, 2019[35]) is a mechanism used by an increasing number of producers to develop and upgrade their innovation capabilities by realising a shift from products to product-service systems. Servitisation can contribute to delivering greater value-added and tailored solutions to better fit customer needs as well as increase the number of revenue streams (Vendrell-Herrero and Bustinza, 2020[36]).

In the case of mining, services demanded by the industry vary according to the lifecycle of mines (from exploration to closure) and need to be in line with the specific legal, technical and economic needs of the mining process. Some of these services demanded in each mining stage include:

• Prospection and exploration, which comprise geological services such as surveying and sample analysis, engineering services that contribute to feasibility studies, mining design and oversight of mining operations.

• Feasibility and exploitation, such as construction services for roads, mine sites and mining camps, drilling services at both exploratory and construction phases. Furthermore, mining is increasingly carried out remotely, which includes services related to data collection and management, specialised software, sensoring, machine learning and innovative business processes.

• Closure and remediation require legal, architectural, urbanistic and environmental services.

Apart from those services linked to the mine itself, there are other services used across the mining value chain. Financial, transportation and research services are also relevant inputs for the refining and transformation process. Furthermore, the current digital and data-driven transition of the industry together with its transformation to carbon neutrality sets up a multitude of new support service needs for the industry. In Andalucía’s refining industry, professional and scientific services and domestic wholesale trade services are the third and fourth most relevant factors of final value-added Andalusia (Institute of Statistics and Cartography of Andalusia, 2017[34]). Likewise, in the transformation of ornamental rocks – for example, to manufacture ceramic products, tiles and other inputs for construction – domestic wholesale trade services are the second most relevant input category in terms of value.

In addition to increased revenue streams, the integration of a servitisation strategy can help the competitiveness of Andalusia’s industrial firms, including those outside the mining industry. Servitisation, sometimes also called product-service innovation, can potentially serve as a means to transition from a transactional-based product business model to a higher-value-added solution delivery business system (Figure 3.5). Servitisation helps producers add value by increasing the customisation of their service-augmented products, also increasing the relational proximity of industry with their clients, which helps establish switching costs that lower competitive pressures for producers.

Figure 3.5. Servitisation as a means of business model transition

Source: Based on Vaillant, Y. et al. (2021[37]), Regions on course for the Fourth Industrial Revolution: the role of a strong indigenous T-KIBS sector, Regional Studies,, https://doi.org/10.1080/00343404.2021.1899157

Boosting the role of the third sector to support mining innovation and entrepreneurship

Universities and research centres also have a key role to play in strengthening the innovation strategies and capacities of mining regions. Andalusia’s regional innovation processes face bottlenecks when linking academia and industry. The interaction of universities and research centres with industry-led innovative projects is low and foreign-innovative firms tend to develop their innovations in house or with support from actors outside Andalusia. Some of the barriers to such collaboration include a lack of awareness of channels to reach and collaborate with local universities and long administrative procedures to partner with academia in specific projects (Government of Andalucia, 2020[32]).

Andalusia has supported the creation of research centres around the mining value chain but results have not been sustainable. In 2002, the regional government created the Advanced Technological Center for Stone (CTAP) in Macael, with the aim of offering technological support to companies in the ornamental mining sector to obtain higher-value-added products for the housing and construction market. Yet, this centre has struggled to be self-sufficient and relied heavily on public finance, which led to its bankruptcy in 2016. As with other sectoral research centres in the region, the CTAP lacked a pool of private-led and demand-driven projects as well as co-ordination with other economic activities (metallic mining and manufacturing), which limited the market scalability of many of the new ideas. Research centres in the region also have low levels of co-ordination among them which hinders the development of sustainable linkages with universities.

A research centre or body on mining sustainability could boost innovation in the region. To ensure the body is sustained in time, its research needs to be driven by project demand and aims for self-financial sustainability. The governance of multiple actors (public, private and academia) can ensure a greater impact on this body. The initiative from such a centre might need to come for the public administration acting as a broker to link different actors and define key basic areas of research in line with industry needs. Some projects at the core of this centre could include technological development to support low-carbon processes in metallic and NM mining, research streams on urban mining, mining waste recycling or linkages among renewable energy and mining energy consumption. This institutional R&D body could also promote knowledge and technological transfer among foreign-based metallic mining companies and local mining companies in the NM sector.

Supporting strong linkages between academia, research centres and industry requires clear leadership from the local government administration and incentives for actors to maintain collaboration. This involves changing the mining policy approach of mostly focusing on mining industry development to one that strives to become a mining talent region. As Chapter 4 will argue, there is a need for a formal co-ordinating body that facilitates frequent interaction and ensures linkages among local actors to achieve concrete outcomes for the future of the mining value chain, including the definition of a clear vision and the development of a technological and expert roadmap for the region. To promote incentives for participation, this can be a project-oriented collaboration.

Greater co-ordination with the national government is also instrumental to boost mining research. The national government plays a relevant role in the allocation of research resources in Spain, which calls for closer national and regional co-ordination on education and research. A common area of interest of this vertical collaboration should be the decarbonisation of the mining value chain, which can help Spain attain climate goals and Andalusia develop an innovative environment with research in green mining processes and technologies.

Other OECD regions have relied on local universities to support their innovation process and promote targeted capacitation to firms and entrepreneurs. Universities can collaborate with the regional government in defining regional development strategies and serve as centres to offer training to public officials (see the last section). For Andalusia, partnering with universities in mining research can also attract new talent and strengthen the links with firms. To make this type of partnership materialise, the regional government should enhance academic programmes focused on mining. This type of model has brought positive outcomes to other OECD regions, for example the agreement between the regional government of Värmland and Karlstad University in Sweden to develop the Academy for Smart Specialisation with the aim to promote regional development (Box 3.10).

Enhancing collaboration for human capital development

The true challenge in the knowledge and data-driven economy will not come from technology but rather in the process and business model innovations that depend on human ingenuity. Whereas the technology is and will be available to all who can afford it and can keep up with the pace of its advances, the ability to effectively optimise their potential and innovate in their use is conveyed by a relatively scarce form of human capital. This will increasingly be the case over the coming years as the digital transformation of the entire economy will mean that the demand for such talent will outweigh its supply (Llinás-Sala, 2020[46]). In Andalusia, talent is needed to facilitate an effective digital transformation but also develop the service sector (KIMS) around the mining value chain.

Andalusia has made various efforts to boost human capital in the region, particularly in mining. The Andalusian Mining Strategy (AMS) 2020 has conducted actions to provide basic or entry-level skills for unemployed people in the form of vocational education, mainly geared towards the ornamental rocks segment. The region also benefits from a number of engineering master and is a well-developed university system.

However, the region, and particularly the mining sector, still lacks a highly educated labour force able to produce the added-value activities needed to improve competitiveness (e.g. development of green technologies or service-related companies). Spain in general and Andalusia in particular are not well provisioned in terms of digital and knowledge-based talent and effective, pre-emptive human capital planning and development is even less common (Deloitte, 2018[47]; PWC, 2018[48]). Furthermore, ageing is leading to generational replacement issues in some traditional activities of the NM industry (marble, gypsum). The capacitation and involvement of the young population in these mining activities is a relevant policy for the future competitiveness of the regional mining industry.

In this context, Andalusia needs to better mobilise and co-ordinate its educational assets (universities, capacitation programmes) to boost the educational level of its workforce and, importantly, preparing it to take full advantage of the technological changes and environmental needs that are sweeping through the mining value chain.

Guiding SMEs towards greater-value-added activities linked to mining to gain resilience

Andalusia has institutional mechanisms that support the development of SMEs in the country. As an example, the Official Credit Institute (ICO in Spanish)’s financing lines for SMEs at a state level as well as the Virtual Office of the Agency for Innovation and Development of Andalusia at a regional level are tools that have contributed to providing – mainly financial – resources to SMEs in creation and development stages. Many of these support programmes acknowledge that starting a business implies taking a risk, not only in the creation itself but also in the management and development along with the business life.

However, regional support programmes to SMEs have room for improvement depending on the nature of their grant aid. Subsidies tend to be the main financial aid for SMEs, yet the use of these financial instruments is limited by the capacity to monitor the use of funds and their effective conversion into investment. Therefore, policy programmes for SMEs require a more holistic view of business challenges, involving not only financial support but also advisory and training programmes, and simplification of regulatory business procedures (OECD, 2018[52]).

The flourishing of SMEs lies not only in their size but also in the economic sector in which they operate. Chapter 2 explored that the low-value-added service sector is the predominant activity in Andalusia (75% overall sector activity). The service sector leads to a low-added-value activity if SME efforts are mainly directed towards tourism or wholesale trade, as is currently the case. As the COVID-19 crisis revealed, tourism-dependent sectors were the most affected by the restrictions of mobility, showing high levels of vulnerability. In Andalusia, the crisis arising from the pandemic led to a shutdown of more than 14 000 companies between February and July in 2020, mainly in the tourism-related sectors (hotels, nightlife and other services), coinciding with the peak period of the COVID-19 pandemic and the fall of international tourism. For this reason, a focus on SME growth and development in sectors such as industry and mining allows improving the added value of local SMEs with direct effects on SME resiliency.

The expansion of the mining sector in the region could also open up new opportunities for local SMEs. New requirements for mining activities (e.g. management of waste and side streams, environmental reports, multifaceted research) and the increasing use of technology in the sector creates possibilities for SMEs. Many mining companies outsource those services to specialised firms, especially when it comes to activities that require local knowledge. For example, occupational safety and the management of safety risks are highly valued at mines and these tasks are often supported by companies with local know-how.

Small firms in NM mining can also benefit from target programmes to increase scale and technological capacity through network activities and financial programmes. In some OECD mining regions, programmes that connect foreign-based or large mining companies with SMEs have been a core policy to promote technological transfer and help involve SMEs in global value chains. Some of these programmes can be accelerators to build capacity and boost quality in providers or broader platforms inside private companies to improve local capacities of SMEs.

Furthermore, closer co-operation with academia allows small companies to leverage cutting-edge research equipment, techniques and workforce from universities and research institutes (OECD, 2019[54]). This can be done by supporting small and micro companies to access training (i.e. managerial training via webinars or personal counselling) and universities’ research equipment and staff. Targeted loans, co-financing programmes or regional grants for innovation can help to address the financial capacity for technology investment and updates.

In summary, a co-ordinated strategy for SME support is needed to help SMEs move into higher-value-added activities and absorb technological change, especially within mining-related activities. For this, and with the aim to make SMEs more resilient, Andalusia’s regional government should conduct a number of actions:

• Unify and co-ordinate the vision for SME development in the region, to connect them with opportunities in the mining value chain. A co-ordination with other strategies (employment, education) can realise policy complementarities and thus help attain regional development goals.

• Strengthen existent technical support office programmes on SME development (e.g. Virtual Office of the Agency for Innovation and Development of Andalusia). The region could boost existent support offices or create specific programmes focused on SMEs in the (metallic and NM) mining value chain. This support should strengthen the provision of training and grants, with a lower reliance on direct transfers, focused on digital transformation and project collaboration.

• Facilitate networking activities with universities and large mining firms. Better linkage with universities can help access training (i.e. managerial training via webinars or personal counselling) and universities’ research equipment and staff. Creating fairs to gather with other SMEs and large firms is a helpful tool for knowledge exchange and to unlock business opportunities.

• Simplify the administrative process to create new SMEs and support their progress. The public administration should help SMEs in screening the regulatory environment and dealing with norms as they tend to be less efficient than large firms. Digitalising administrative processes and promoting capacitation for SMEs in this regard tend to have important positive effects on small businesses. High costs and complexity of tax compliance fall disproportionately on small and young firms. Encouraging SME growth based on simple not overly costly steps under an umbrella of certainty within bureaucratic frames is essential to increase the risk capacity of SMEs.

The regional government of Andalusia could also follow some of the OECD recommendations for SMEs to weather the COVID-19 crisis and the subsequent economic recovery (Box 3.14). The region can take stock of the OECD recommendations to make sustainable businesses viable and to address economic recovery by building their resilience.

Spain relies on outdated and complex mining regulation

As in many countries, in Spain, the state is the owner of mineral resources and has the foundation powers to regulate their use, exploit them or assign their exploitation to third parties (Portal Andaluz de la Minería, 2020[57]). As mineral resources constitute a good of public interest, a public authority needs to issue a permit (authorisation or concession) for their exploitation. The requirements to obtain these permits depend on the type of mineral resource, the nature of the petitioner and other conditions related to the exploitation site (e.g. if there were previous mining activities). Given the autonomy of regions in Spain, the public authority issuing these permits is the mining authority of the region. Only when a mining project covers different regions, the permit is issued by the national government.

In Spain, the mining legislation relies on an outdated law with a number of legal guidelines issued at different times and without a legal co-ordinating document The Mining Law of 1973 is the legislation governing mining exploration and extraction, authorisations and permits and the applicable offences and sanctions. The national government has tried different opportunities to update the law (notably in 2003 and 2015) but without any success due to lack of consensus within the government as well as with regional governments and the private sector.

The Spanish mining law is outdated in many senses and the regulatory framework involves a multitude of authorities and different regulations. The mining law in Spain was issued prior to the Constitution of 1978 and the accession of the country to the EU (1986). Therefore, and despite a number of modifications, the governing mining law has scope to better align with the general administrative competencies set by the constitution and with the normative framework after the EU accession. Furthermore, the additional sets of regulations lead to multi-layered legislation that requires greater co-ordination among economic and environmental authorities. This is particularly evident in the environmental-related regulation. As a result of EU acquis, the national government has issued new environmental laws and decrees to include environmental concerns into the overall mining regulation (Table 3.6).

Apart from the national legislation, each region in Spain has additional laws for mining development. Regions have autonomy with the legislation related to environmental evaluation, environmental protection, site rehabilitation and land use. Some of these legislations are at the regional and provincial level, as is the case of land use planning. In Andalusia, at least 8 provinces have land use plans containing specific limitations to mining activities, while such limitation covers less than 2% of the regional territory (Regional Government of Andalusia, 2013[18]). Andalusia also has a law (42/2007) to protect its environmental assets and biodiversity. The protected areas (165 areas) have different levels of protection as some of them are included in the European network of specially protected areas (Natura 2000).

As Chapter 4 will mention, the lack of a national mining strategy makes it difficult to have a clear and co-ordinated vision and practices for mining activities across the territory. The Ministry for the Ecological Transition and of the Demographic Challenge gathers annual meeting among regions to discuss mining regulatory issues. However, as mining is mostly in the remit of the regions, the effort from the national government is rather passive and guidelines issued from the meeting tend to be non-binding documents. To promote a competitive and sustainable mining sector, the Ministry for the Ecological Transition and the Demographic Challenge should update its mining law in order to co-ordinate legislation consolidate different decrees on the matter.

Despite the issues with the national mining regulatory framework, the degree of efficiency and predictability of the application of this regulation relies heavily on the administrative capacity of each region. Regional governments have scope to reduce the administrative burden on mining regulation and, in turn, increase the attractiveness for international investors. This degree of autonomy can also be positive in terms of adapting the regulation to the region’s needs and development goals.

Andalusia’s permitting process has scope to improve predictability and reduce delays

Andalusia has conducted efforts to reduce times of response in the permitting process of mining ventures. The Andalusia Mining Strategy 2013-20 included an objective to improve administrative procedures for mining activities and adapt them to industry needs (Chapter 4). This strategic effort brought some positive results with an average reduction of approval times for mining rights’ requests. The reduction occurred across all different types of minerals and types of permits: research/exploration permits or mining concession/exploitation permits (Figure 3.6).

Figure 3.6. Average time for approval of mining permits in Andalusia

Source: Portal Andaluz de la Minería (2020[58]), Consultation of the Andalusian Mining Registry (CMRA), https://ws050.juntadeAndalusia.es/portalandaluzdelamineria/ConsultaRMA (accessed on December 2020).

However, the average approval times still lack predictability with high variation among similar types of permits’ request. Since the launch of the strategy, approval times of concession permits for metallic mining have had an important time variability (an average standard deviation of 130 days). Some demands of concession permits have taken up to two and half years to be solved, while others have received approval in three months or less. Lack of standardisation on approval times also occurs in research permits. Since 2014, the average approval time for research and exploration permit requests was close to 2 years (709 days) but there is still an important share of requests being resolved in more than 2 years (35%). This contrasts with the average time needed to obtain exploration permits in many OECD countries. A study by Stedman and Green (2018[59]), based on a survey of 160 executives and managers, shows that in many OECD mining jurisdictions, most respondents obtained the exploration permits in less than 14 months. Notably, British Columbia in Canada (94%), Western Australia (91%), Sweden (90%) or Finland (84%).

The regulatory framework (national or regional) does not have a clear directive on the maximum time needed or expected to solve mining permit requests. OECD regions that lack legal clarity on timelines and a high disparity in response times tend to create uncertainty for firms based on low predictability on the mining administrative processes (OECD, 2021[42]). Delays in the permitting process of Andalusia, as in many mining jurisdictions with a similar issue, are linked to insufficient staffing, imprecise timelines for public administrations to respond, vague guidelines for the assessment of cases and unclear specification of lead agencies, which leads at the same time to issues in the applications from the private sector.

Delays in Andalusia also seem related to the legal vulnerability of public officials in charge of mining-related decisions. Environmental appeals and legal actions of public interest groups against mining ventures in Andalusia increasingly deter public officials from taken decisions on permits as the legal consequences on those appeals can rely on them (Government of Andalucia, 2020[32]). To address this issue, an institutional body to support the decision of public officials in charge of permits can provide an ex ante analysis and formal opinion over the permit’s demand to validate to back public officials on their decision. Furthermore, in the context of increasingly complex mining operations, the need for staff with updated training is a pressing issue for the region (Government of Andalucia, 2020[32]), which should require greater specialised training.

The region has also the scope to improve co-ordination among ministries to reduce delays in mining permits and procedures. Firms have indicated frustration with the lack of co-ordination among different responsible ministries in Andalusia when it comes to administrative decisions on mining permits (Government of Andalucia, 2020[32]). As mining ventures involve different types of administrative permits, from environmental to economic and land use, the co-ordination of administrative tasks among different ministries is crucial to reduce delays of responses.

While Andalusia’s mining strategy aims to decrease the delay times, there is no specific goal on response times by the type of permit. In fact, the objective of the former strategy (2014-20) to reduce administrative times included two performance indicators to monitor response times and the number of mining permits managed electronically that were never created. The region seems to co-ordinate mining administrative procedures with frequent meetings among ministries. Yet, such exchanges of information are set under an informal type of setting. It creates particular delays between authorities in charge of economic and environmental regulation as well as separate communications with the private sector.

The regional government has also created the Project Accelerator Unit to accelerate strategic projects (in 2019). Specifically, this unit promotes the streamlining of all the procedures of the Andalusian public administrations for effective processing of regional interest projects. The unit also guides and informs firms about the existing procedures in the different administrations. This unit is directly attached to the regional Ministry of Presidency, Public Administration and Interior (Regional Government of Andalusia, 2020[60]). However, it manages all priority projects for the region and faces trade-offs on the decision about project prioritisation.

To address this co-ordination bottleneck within the administration, Andalusia should establish a formal co-ordination mechanism that brings together, on a regular basis, representatives from different regional ministries to decide on mining permits and mining procedures on a project-by-project basis. This mechanism could be in the form of a one-stop-shop, a single decision-making body or a specialised body inside the Project Accelerator Unit.

This institutional platform should create procedures to reduce the legal risk faced by public officials when taking administrative decisions on mining. For this, this structure could rely on external actors (universities or specialised consultants) to help validate the demands of mining projects and provide advice to better align them with local needs.

To support the work of this co-ordination mechanism and reduce uncertainty, Andalusia needs to introduce standardised procedures with roadmaps for environmental impact assessments (EIAs). There have been cases where exploration projects are being conducted without consulting the local community, which leads to social unrest. Dealing with potential environmental issues in the early stages can provide greater legitimacy of the next steps in the administrative process and reduce firms’ uncertainties with projects while promoting the early involvement of public interest groups in mining plans.

The regional government of Andalusia can put in place a number of actions to improve the administrative procedures for doing business in mining. These actions aim to reduce delays in response times for mining permits, upskill public staff in charge of mining procedures and back their decisions regarding permit requests as well as ensure a transparent and inclusive process for mining projects from the exploration phase. For this, the regional government of Andalusia should:

• Establish a formal co-ordination mechanism within the regional government to evaluate and deal with administrative processes for mining projects, including awarding permits. This institutional body or mechanism (e.g. a one-stop-shop, a single decision-making body) could follow a similar structure to the Project Accelerator Unit and gather responsible officers from different regional ministries to accelerate mining administrative processes. It should promote co-ordination across regional regulations (e.g. environmental and land use) and with the national legislation. This body could also rely on external actors (universities or specialised consultants) to issue formal recommendations on mining projects to reduce the legal vulnerability of public officials.

• Create specific programmes to train staff and provide digital support in relation to mining administrative processes and a new type of mining operations. Partnering with metallic and NM mining business associations would be needed to deliver this task.

• Setting clear administrative timelines to deal with demand and development of mining projects, including environmental evaluations. Expected timelines can be set in the mining strategy as a clear goal for improvement. Andalusia can find inspiration in the roadmap set by Canada (Box 3.15).