Can mining investments improve development? Contrary to conventional wisdom that extractive industries typically hinder development, we argue that mining can stimulate local-level development through bargaining between state, firms, and local communities. We collect information on all mining investments in India between 1995-2020 to test this theory. Using a difference-in-differences design, we demonstrate that mining investments can increase large-scale infrastructure investment but have limited effects on local public goods or individual-level welfare. We attribute this discrepancy to the uneven distribution of benefits, with promised investments often failing to benefit mining-affected communities. We provide evidence of our bargaining mechanism by demonstrating that mining investments spur conflict between state and society and that communities with better bargaining power achieve more positive development outcomes. Our findings highlight the importance of understanding state-society interactions to development outcomes in extractive contexts.