Resource Towns and Ghost Towns

How towns built around mines, oil fields or single industries boom and bust, and how some manage to diversify before resources run out.

Some towns exist mainly because of a single resource or industry: a mine, an oil field, a timber mill or a factory. These resource towns or single-industry towns often experience dramatic booms and busts.

The boom

When a resource is discovered or prices rise, workers flood in. Wages rise, housing becomes scarce and expensive, and local businesses thrive. Examples include gold rush towns in 19th-century California and Australia, and oil boom towns such as those in North Dakota during the shale boom of the 2010s.

The bust

When the resource runs out, prices fall or the industry declines, the town can collapse. Jobs vanish, people leave and property values fall. Some towns are completely abandoned, becoming ghost towns.

Company towns

Company towns were built and run by a single company, which owned housing, shops and services. India’s Jamshedpur, founded around the Tata Steel plant in the early twentieth century, is a famous example that grew into a major, diversified city. Many company towns elsewhere declined when their companies left.

Diversification

Some resource towns successfully diversify:

Using resource revenues to build education, infrastructure and new industries.
Developing tourism based on the town’s history or natural surroundings.
Becoming regional service centres.

Others fail because the resource industry crowds out other activities during the boom, and skills do not transfer easily.

Coal regions in India

India’s coal-producing districts, such as Dhanbad in Jharkhand, depend heavily on coal mining. As India’s energy transition progresses, these regions will need to diversify. Studies on a just transition for India’s coal regions examine how to create new jobs and replace lost revenue.

The mining town

A mining company opens a copper mine in a remote area. A town grows around it with schools, shops and homes. Decades later, the ore runs out and the mine closes. Without other industries, workers leave and the town shrinks. Towns that planned ahead, using mining revenue to build other activities, fare much better.

Thinking booms last forever

Resource booms are often temporary. Towns that treat boom revenues as permanent can suffer severely when prices fall or resources run out.

Key takeaways

Resource and single-industry towns often boom and bust.
Busts can leave ghost towns when resources run out or industries decline.
Company towns like Jamshedpur can grow into diversified cities.
India's coal regions face the challenge of diversifying during the energy transition.