Archive | Resource Nationalism

MINING NATIONALISM RISES IN AFRICA – by Henry Sanderson, Harry Dempsey and Neil Munshi (Ozy.com – October 13, 2019)

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Sierra Leone’s abrupt cancellation of an iron ore mining license last week has raised concerns about a resurgence of resource nationalism across the continent.

The action is the latest in a string of disputes between governments and mining companies in Africa, which is home to rich resources of iron ore, copper, gold and diamonds.

Gerald Group, a metals trader, said last Tuesday that its license to mine the steelmaking ingredient was canceled “with immediate effect” by the government, and it would pursue claims for more than $500 million in compensation. Continue Reading →

New PNG leader “taking back” economy, puts resources firms on notice – by Tom Westbrook, Jonathan Barrett and Sonali Paul (Reuters Africa – May 30, 2019)

https://af.reuters.com/

SYDNEY/BRISBANE (Reuters) – Papua New Guinea’s new prime minister pledged on Thursday to “tweak and turn” laws governing how natural resources are extracted to help lift the vast South Pacific archipelago out of poverty.

James Marape, a former finance minister who became leader after winning a vote in parliament, put some of the world’s biggest resources companies on notice over a perceived lack of wealth flowing from their projects back to communities.

Marape, who hails from PNG’s poor but gas-rich highlands, had even quit the government in April after questioning a deal with France’s Total, which allows it, Oil Search Ltd and ExxonMobil Corp to begin work on a $13 billion plan to double gas exports. Continue Reading →

Zambia Files Notice of Plans to Seize Vedanta Copper Assets – by Taonga Clifford Mitimingi and Matthew Hill (Yahoo Finance – May 20, 2019)

https://ca.finance.yahoo.com/

(Bloomberg) — Zambia’s government filed notification of plans to take over Vedanta Resources Ltd.’s domestic copper assets, President Edgar Lungu said. The southern African nation’s Eurobond yields surged to a record high and the currency hit a 3 1/2-year low.

The move marks an escalation in tension between the government and mine owners, after Lungu last week threatened to “divorce” Vedanta and Glencore Plc, two of the biggest employers in Africa’s second-largest copper producer. Relations have been simmering after the state earlier this year increased royalties and unveiled a plan to overhaul the value-added tax system.

Lungu mainly targeted Konkola Copper Mines, Vedanta’s local unit, in a weekend visit to Zambia’s Copperbelt province, where some companies are cutting production and firing workers. Continue Reading →

How countries are getting tougher with mining companies – by Barbara Lewis (Reuters U.K. – April 4, 2019)

https://uk.reuters.com/

LONDON (Reuters) – A mix of political populism, higher commodity prices and the expectation electrification will spur demand for some raw materials has led resource-holding governments to change the rules for miners operating in their countries.

In most cases, governments are seeking to increase their share of profits, rather than all-out resource nationalism, although Mongolia has been trying to nationalise a stake in a copper mine. The toughness is not universal.

Some governments see the hardened stance of other countries as a chance to lure investment. Ethiopia is rolling out pro-business reforms after Prime Minister Abiy Ahmed swept into office last year. Continue Reading →

Resource nationalism risk to investment on the rise, led by Africa: study – by Robert Perkins and Diana Kinch (S&P Global Platts – March 21, 2019)

https://www.spglobal.com/

London — Indirect forms of resource nationalism, particularly in Africa, are on the rise, threatening the investment climate in some of the world’s biggest oil and mineral producing nations, according to global risk consultancy Verisk Maplecroft.

A total of 30 countries have witnessed a significant increase in resource nationalism risks over the last year, including 21 major producers of oil, gas and minerals, Verisk Maplecroft’s latest Resource Nationalism Index shows. The country now most at risk is the Democratic Republic of Congo, which has been downgraded by five places in the rankings from a year ago to the highest globally alongside Venezuela.

Regionally, Africa is also home to 10 countries experiencing a growth in resource risks, including Tanzania (third highest risk), Zambia (17th) Gabon (23rd) and Equatorial Guinea (40th), according to the study. Continue Reading →

Arctic ambitions of China, Russia – and now the US – need not spark a cold war – by Nong Hong (South China Morning Post – March 11, 2019)

https://www.scmp.com/

While competition over access to resources is inevitable, security concerns aside, the three share many common interests. Recent US investment in the Arctic to counter Chinese and Russian influence heightens the need for partnership

The United States has always been a reluctant power in the Arctic. It has invested very little into its Arctic resources – with no real ports along Alaska’s Arctic waters, little military presence, and insufficient diplomatic engagement.

However, in February, the US government allocated a total of US$675 million in funding for new icebreakers, which military leaders deem vital for competing with Russia and China in the Arctic.

When US Secretary of State Mike Pompeo visited America’s Nato ally, Iceland, on February 15, he also discussed China and Russia’s growing presence in the Arctic. It seems that the US has begun to shift its Arctic policy, now aimed at countering the growing influence of China and Russia in the high north. Continue Reading →

The Fight Between Miners and African Governments Is Just Getting Started – by Thomas Biesheuvel, William Clowes and Felix Njini (Bloomberg News – February 14, 2019)

https://www.bloomberg.com/

States are seeking a bigger share of benefits from their mineral riches.

Standing before hundreds of mining investors and executives last week, Ghanaian President Nana Akufo-Addo issued a firm warning: stop expecting supercharged profits from Africa’s mineral riches.

It’s a theme that has simmered for years, as governments across the continent seek a bigger share of benefits from their natural resources. The debate ratcheted up in 2018, with countries including the Democratic Republic of Congo and Zambia—the continent’s No. 1 and 2 copper producers—becoming increasingly insistent that producers must pay up.

There’s also been a backlash against the terms under which foreign companies agreed to invest in the first place—many mining codes, investment pacts and joint ventures were drawn up based on lower commodity prices and by previous regimes. Continue Reading →

African Leaders Put Rich Nations On Notice That Days Of Cheap Resources Are Ending – by Lisa Vives (InDepthNews.net – February 12, 2019)

https://www.indepthnews.net/

Global Information Network – NEW YORK | CAPE TOWN (IDN) – African leaders had a new message for foreign companies seeking the diamonds, gold, rubies and emeralds so plentiful in desperate dirt-poor countries and so pricey when polished and sold in New York, Paris and Switzerland.

We’re no longer a cheap date. That message – in so many words – was heard again and again at this year’s posh African Mining Indaba (February 3-6) – a glittering conference in Cape Town, South Africa, that unites investors, mining companies, governments and stakeholders from around the world with the single goal of advancing mining on the African continent.

Not every African leader was threatening to pull “unusual tax incentives” from contracts with western companies. But at least one president drew a line in the sand, declaring it was simply unjust that Africa, rich in minerals sought after by the world, should remain inhabited by the poorest people in the world. Continue Reading →

African nations sense upper hand in minerals stand-off – by Barbara Lewis and Joe Bavier (Reuters U.S. – February 8, 2019)

https://www.reuters.com/

CAPE TOWN (Reuters) – African nations with rich reserves of copper and cobalt needed for the shift to electric vehicles sense they have the upper hand in negotiations with mining companies that are struggling to secure better terms.

Days of talks at the Mining Indaba in Cape Town – Africa’s premier mining investment conference – yielded no tangible breakthrough between the miners and governments increasingly keen to reassert control over their natural resources.

Copper and cobalt reserves are giving nations such as Zambia and Democratic Republic of Congo confidence because of the difficulty in finding supplies elsewhere to meet the expected surge in demand. This has emboldened them to seek higher tax revenues from foreign mining companies. Continue Reading →

Guatemalan mine conflict alarms industry across Latin America – by David Alire Garcia (Reuters U.K. – December 24, 2018)

https://uk.reuters.com/

CASILLAS, Guatemala (Reuters) – A bitter drama playing out over a Guatemalan silver project forced to close by the courts has shocked miners throughout Latin America, sounding a warning to firms to approach indigenous issues more cautiously or pay the consequences.

Work at the Escobal mine, where U.S.-based Tahoe Resources has invested more than $500 million (395.3 million pounds), was abruptly suspended last year by judges pending consultation of nearby indigenous Xinca communities, a decision upheld by Guatemala’s top court in September.

Leaders of the Xinca, a mainly farming community which claims a 400,000-strong population, oppose the mine due to worries it will harm their ancestral land and water resources. Continue Reading →

Countries Push to Extract More Cash from Big Mining Companies – by Rhiannon Hoyle and Alexandra Wexler (Wall Street Journal – November 18, 2018)

https://www.wsj.com/

Jakarta/Kalumbila – From Congolese jungles to Indonesian highlands, a struggle is raging between governments and major mining companies over control of commodities vital to the production of everything from steel to electric cars to smartphones.

Developing-world leaders, spurred by rising mineral prices, are making their toughest demands on Western mining companies in years, squeezing them to pay higher royalties and taxes, process commodities locally and cede control of mines.

In Indonesia, Rio Tinto RIO 1.76% PLC and Freeport-McMoRan Inc. were pressed to sell majority control of the world’s second-largest copper mine, Grasberg, to a government that aims to transform its state-owned resources companies into industry behemoths. Continue Reading →

[Afghanistan Mining] How to Avoid the Resource Curse? Take Six Years to Approve Deals – by Eltaf Najafizada (Bloomberg News – November 7, 2018)

https://www.bloomberg.com/

Afghanistan selected preferred bidders for three gold and copper mines in 2012. It took the war-torn nation six years to finally sign the contracts.

Afghan President Ashraf Ghani announced the deals in the past few weeks. The government took time to finalize the agreements because it wanted to ensure they were transparent and will help eliminate corruption in awarding contracts, Ghani said in an interview in his office in Kabul. After his election, Ghani ordered his administration to review 14 mineral and oil contracts that had stalled.

Harnessing “natural wealth around the world has been rarely successful. Most of the time it’s been called the curse of the natural resources,” Ghani, 69, said. “We were focused on avoiding this.” Continue Reading →

Hands off Brazil’s niobium: Bolsonaro sees China as threat to utopian vision – by Jake Spring (Reuters U.S. – October 25, 2018)

https://www.reuters.com/

CATALÃO, Brazil (Reuters) – Jair Bolsonaro, the far-right candidate favored to win Brazil’s presidential election this Sunday, has a vision for his nation’s economy: niobium.

This mineral is used as an additive to steel to make the metal stronger and lighter. Niobium is in high demand by automakers, aerospace companies and a host of other industries. Brazil accounts for about 85 percent of the world’s supply. And Bolsonaro wants to keep it that way.

China’s purchase two years ago of a small Brazilian niobium mine has the candidate agitating to block other foreign purchases of assets deemed strategic. So smitten is Bolsonaro with niobium – and Brazil’s potential to capitalize on its production – that he produced a 20-minute YouTube video touting its virtues. Continue Reading →

Growing government control over resources sounds alarm bells – by Lisa Steyn (Business Day – October 12, 2018)

https://www.businesslive.co.za/

Resource nationalism takes various forms including higher royalties and taxes imposed on companies

Alarm bells are sounding for the mining industry over growing government control of resources in Sub-Saharan Africa, as states try to cash in on higher commodity prices and secure votes ahead of elections.

This phenomenon — dubbed resource nationalism — is unlike outright nationalisation seen in the 1960s and 1970s when governments took full control of mines. Instead it takes various forms, including higher royalties and taxes imposed by states on companies, and the introduction or increase of compulsory minimum quotas for ownership. An emphasis is also placed on aspects such as local beneficiation and procurement of local goods and services.

It has taken hold in Tanzania, the Democratic Republic of Congo and even SA, according to Peter Leon, partner and Africa cochair at law firm Herbert Smith Freehills, who presented at the International Bar Association Annual Conference in Rome from October 7-12. Continue Reading →

“It is not clear to me that geopolitical risk has increased” – by Staff (Mining Journal – October 3, 2018)

https://www.mining-journal.com/

Rule, the president and CEO of Sprott US Holdings, says in an interview with mining risk advisory firm Critical Resource that miners must be prepared to take a stronger stand and not allow politicians and bureaucrats to shun rational economic and social debate.

“The industry needs to be much more proactive on … the issue of resource nationalism and resource rent,” he said.

“For example, we are confronted with cases like Zambia trying to tax First Quantum a sum that exceeds the company’s global sales during the period of the alleged infractions. Not only does the industry need to point out the absurdity of that, but it also needs to initiate a debate on what is the appropriate level of social rent. Continue Reading →