• Home
  • Topics
  • Forward Linkages (Supplying Extractives’ Downstream Sectors)

Forward Linkages (Supplying Extractives’ Downstream Sectors)

At a Glance

  • “Forward” (or “downstream”) linkages involve the processing or refining of any raw material produced by an extractive industry. This includes any work that adds value to the raw material (also called “beneficiation”).

  • The results of these downstream processes serve as important inputs into other products and processes, particularly in the chemicals, energy, and transport sectors.

  • While the costs and constraints, as well as potential benefits, of adding value to a raw material vary considerably across contexts and processes, there is a general rule of thumb to keep in mind. The further downstream that this work take place, the greater are the potential risks and rewards. Any risk assessment must therefore carefully weigh costs and benefits in the specific context being analyzed.

Case Studies

Key Resources

Topic Briefing

“Forward” (or “downstream”) linkages entail the processing or refining of extractive-industry-produced raw material and any other work that adds further value to this material.

Read more

For example, oil and gas, after extraction, may be refined into a variety of products, such as methane, propylene, diesel and other fuels. Many of these products are important inputs into other products and processes, particularly in the chemicals, energy, and transport sectors.

In the case of mineral resources, the ore is separated from the rock and refined (or “semi-fabricated”) into a form that enables its use as an input into other processes, and then into a variety of other products.

For both oil and gas, and mineral resources, decisions regarding processing and refining need to be made first, before decisions regarding other activities further downstream.

The costs and constraints, as well as the potential benefits, of forward linkages vary considerably across contexts. In general, the further downstream an activity is, the greater are the potential benefits—and also the costs and constraints, and thus the need for a careful cost-benefit analysis.

The purpose of this section of the ELLED Framework is to describe the opportunities, challenges, and risks associated with the downstream beneficiation of mineral and oil and gas outputs. Policy makers and regulators need to fully understand these, and the policy options available for addressing them. Exploring all the articles listed, by subtopic, under the “Forward Linkages” topic heading will provide a good starting point.