Archive | Resource Nationalism

Resource nationalism on the rise in sub-Saharan Africa – by Nadine James (MiningWeekly.com – June 15, 2018)

http://www.miningweekly.com/

The seemingly increasing trend towards nationalist thinking, combined with and likely driven by growing economic inequality, has resulted in several changes in mining and tax legislation in sub-Saharan Africa countries.

Herbert Smith Freehills Africa Group co-chair and partner Peter Leon says the recent and significant changes to mining regulations in various African States have caused concern that a “regional trend of resource nationalism may be emerging”.

White & Case partner Rebecca Campbell notes that her firm’s yearly mining survey of 2018 found that about 45.1% of respondents believe that the heightened risk of resource nationalism across Africa makes it difficult to justify investment. Continue Reading →

Distraction or disaster? Freeport’s giant Indonesian mine haunted by audit report – by Bernadette Christina Munthe and Fergus Jensen (Reuters U.S. – May 24, 2018)

https://www.reuters.com/

JAKARTA (Reuters) – A state audit of operations at Indonesia’s Grasberg mine has cast a cloud over the government’s multi-billion-dollar deal to take a majority stake in the mine from Freeport McMoRan Inc and its partner Rio Tinto, according to government and company officials.

In April, in follow-up action to the audit, the environment minister issued two decrees that gave Freeport six months to overhaul management of its mine waste, or tailings, at Grasberg, the world’s second-biggest copper mine. One of the decrees said Freeport would be barred from any activities in areas that lack environmental permits.

And there may be more troubles to come for the Phoenix, Arizona-based company as the government has so far acted on only a part of the 2017 report by Indonesia’s Supreme Audit Agency (BPK) on Freeport’s decades-long operations at the mine in Indonesia’s remote easternmost province of Papua. Continue Reading →

Tanzanite miner gets bill as Tanzania cracks down on lost mineral revenues – by Omar Mohammed (Reuters U.S. – May 17, 2018)

https://www.reuters.com/

NAIROBI (Reuters) – Tanzanian gemstone miner Tanzanite One has agreed to pay compensation and overdue taxes to the government after unspecified violations led to losses in public revenues, the president’s office said.

President John Magufuli’s government accuses mining firms of cheating Tanzania out of its fair share of mineral wealth through tax dodging and smuggling, allegations they deny.

Tanzanite One, which claims to be the biggest miner of tanzanite – a blue-violet gemstone found only in the East African nation – acknowledged mistakes but did not disclose what violations had been committed or how much it would pay in compensation. Continue Reading →

Rising Resource Nationalism Seen as ‘Fire Burning’ for Miners – by Danielle Bochove (Bloomberg News – May 16, 2018)

https://www.bloomberg.com/

A rising tide of resource nationalism is causing miners to rethink where they invest and creating volatility for a sector already buffeted by brewing trade wars.

“A significant industry issue is resource nationalism,” Rio Tinto Group Chief Executive Officer Jean-Sebastien Jacques told investors at a conference in Miami this week. “From the DRC and South Africa to Mongolia and Australia, it is gaining momentum. As a result, the case for investment and FDI is clearly under threat.”

Among the most epic battles is Freeport-McMoRan Inc.’s fight to secure long-term rights to its flagship Grasberg copper-and-gold mine in Indonesia. Its joint venture partner, Rio Tinto, is in talks to extricate itself by selling its stake to local interests. Continue Reading →

Rio Tinto CEO calls for ‘United Nations of the mining world’ – by Barbara Lewis (Reuters U.S. – May 15, 2018)

https://www.reuters.com/

LONDON (Reuters) – Rio Tinto (RIO.L) (RIO.AX) CEO Jean-Sebastien Jacques said resource companies needed to build “the United Nations of the mining industry” to tackle rising resource nationalism and cost inflation.

Rising commodity prices typically lead to resource nationalism as they inspire resource-holding nations to demand higher shares of international mining companies’ profits.

At the same time, the miners say increased energy prices and wage demands are driving cost-inflation and eroding profit margins. They also say their profits required years of investment throughout the commodities cycle and their projects provide jobs and tax revenues for host nations. Continue Reading →

Rio Tinto warns of threat from rising costs and resource nationalism – by Neil Hume (Financial Times – May 15, 2018)

https://www.ft.com/

The head of Rio Tinto has issued a stark warning to the mining industry, saying it will have to work hard to protect margins and generate cash against a backdrop of rising costs and increased political risk.

Rio chief executive Jean Sebastien-Jacques said cost inflation driven by near $80-a-barrel oil was affecting the entire sector and all commodities, while resource nationalism was gaining momentum.

“The outlook for global growth remains positive — but there are some significant risks. Volatility in markets . . . trade wars and resource nationalism are all sources of uncertainty,” Mr Jacques told investors at the Bank of America Merrill Lynch conference in Miami. Continue Reading →

Congo Finalizing Mining Rules After Company Concerns Ignored – by William Clowes (Bloomberg News – May 9, 2018)

https://www.bloomberg.com/

The Democratic Republic of Congo’s Mines Ministry said it’s completing work on new regulations, as a draft document showed the government has so far ignored companies’ key concerns about the reforms.

Miners including Glencore Plc and Randgold Resources Ltd. have demanded the government dial back aspects of the legislation approved by President Joseph Kabila in March.

The ministry makes no mention of any of the major changes the companies seek, according to a draft document seen by Bloomberg that was verified by a member of a commission charged with revising the mining code and by a mining-company manager. Continue Reading →

Just when you thought it was safe to buy SA mining shares again – by Brendan Ryan (MiningMx – April 30, 2018)

http://www.miningmx.com/

I think the decision by Minister of Mineral Resources Gwede Mantashe to do an “about face” over the High Court ruling on “once empowered, always empowered” and appeal the judgement is hugely negative.

It reveals that “the leopard cannot change its spots” because it shows once more that a critical part of the ANC’s ideological make-up is an underlying mistrust and dislike of the country’s mining industry. I expressed exactly this opinion of the ANC in a column published on April 11 after Mantashe’s speech to the Joburg Platinum Industry Seminar at which he declared the platinum sector was NOT in a crisis.

My opinion is not shared by the Chamber of Mines which is trying to smooth things over as best it can stating that it, “respects the right of the Minister and the Department of Mineral Resources (DMR) to lodge an application to appeal the judgement. Continue Reading →

Copper and cobalt markets at risk of supply disruptions – by Neil Hume and Henry Sanderson (Financial Times – April 30, 2018)

https://www.ft.com/

Glencore and Freeport-McMoRan under pressure in DRC and Indonesia

The commodities industry has been focused on the crisis surrounding Rusal, the Russian aluminium producer, but a number of disputes entail higher prices for copper and cobalt.

In the past week, the Democratic Republic of Congo’s state-owned mining company has filed legal action against Glencore, while in Indonesia the government has imposed new environmental standards on the giant Grasberg copper and gold mine owned by Freeport-McMoRan.

“Political risk has gone from being little thought about to being a major concern,” Michael Stoner, an analyst at Berenberg, said. Continue Reading →

Risky business: managing political instability in the mining industry – by Julian Turner (Mining-Technology.com – March 27, 2018)

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

Managing political and regulatory risks while operating abroad is now a business imperative for mining operators. Julian Turner talks to Rob Foulkes and Charlie Pembroke of consultancy Critical Resource about sustainability, licence to operate issues and avoiding mistakes of the past.

Anyone in search of a cautionary tale about the myriad risks faced by energy and mining companies operating abroad need look no further than Acacia Mining and its ongoing travails in Tanzania.

In 2017, the East African nation accused the London-listed gold miner of under-reporting output at its three mines and banned it from exporting powdered gold concentrate. The embargo cost Acacia’s chief executive and chief financial officer their jobs, and the company around $1m (£760,000) a day. Continue Reading →

As Commodities Roar, Africa Wants Bigger Slice of Mining Pie -by Thomas Biesheuvel and Thomas Wilson (Bloomberg News – March 22, 2018)

https://www.bloomberg.com/

One by one, the biggest names in African mining are getting squeezed. The tactics might be blunt, but the message is clear: the countries where they operate want a bigger share of the proceeds.

The collapse in commodities through 2015 hobbled some of Africa’s biggest resource economies, stunting growth and leaving budgets short. Since then a recovery in prices has sent the continent’s biggest miners soaring, boosted profits and rewarded shareholders with bumper payouts. But a lack of returns to governments is drawing a backlash from Mali in the Sahara to Tanzania on the Indian Ocean.

Zambia is the latest flash point. Africa’s second-biggest copper producer slapped a $7.9 billion tax assessment on First Quantum Minerals Ltd. and said it’s planning an audit of other miners in the country. Companies operating in Zambia include units of Glencore Plc and Vedanta Resources Plc. Continue Reading →

Canadian miners struggle with wave of African tax increases – by Niall McGee and Geoffrey York (Globe and Mail – March 22, 2018)

https://www.theglobeandmail.com/

A wave of African tax increases is engulfing some of Canada’s biggest mining companies, leaving them scrambling to negotiate with newly assertive governments that have lost patience with traditional tax deals.

First Quantum Minerals Ltd. is the latest Canadian company to be hit with a massive tax bill. Zambian authorities have told the company to pay an additional US$8-billion in taxes and penalties for failing to pay proper duties on imported supplies over the past five years.

First Quantum’s chief executive, Philip Pascall, admitted on Wednesday that he had been completely blindsided by the shock announcement. “I literally heard about this the day before yesterday,” he told investors in a conference call as he tried to mollify their concerns. Continue Reading →

Guatemala Mines a Mother Lode of Trouble – by Mac Margolis (Bloomberg News – March 1, 2018)

https://www.bloomberg.com/

A bitter fight over a silver mine points to the pitfalls of Latin America’s new resource nationalism.

Although it’s small and mostly poor, Guatemala sits on a heap of treasure. Last year, it ranked as the world’s 15th-largest producer of silver, a nest egg that could yield economic growth and taxes and royalties, helping to hoist millions from misery.

So why is the Escobal silver mine, one of the world’s largest, idle? In 2014, when the Canadian-owned Tahoe Resources Inc. started production, corporate touts projected a two-decade bonanza. Now they’re facing a shuttered mine, protesters, and a lode of legal troubles.

To hear tell from the mine’s backers, including U.S. legislators in a letter to President Jimmy Morales and Guatemalan industrialists, Escobal is the victim of choleric political activists, and even “criminal groups,” as one company official told me, who are using the courts as a fig leaf to thwart foreign investors. Continue Reading →

Tanzania’s new mining law will compel foreign companies to boost local financial firms – by Abdi Latif Dahir (Quartz Africa – February 2, 2018)

https://qz.com/

Tanzania is set to overhaul its extractive industry after the government passed a new law that posits strict guidelines for foreign companies.

The new law gives companies three months to comply with the regulations, while also making them apprise the government of how they are enacting these changes.

As part of reform, the government wants to enhance the competitiveness of local mining and financial institutions by setting minimum employment levels and in-country spend for foreign firms, while also providing a structural monitoring and reporting system that ensures companies deliver on these objectives. Continue Reading →

COLUMN-Indonesia’s Freeport-Rio plan masks longer-term issues – by Clyde Russell (Reuters U.K. – December 7, 2017)

https://uk.reuters.com/

LAUNCESTON, Australia, Dec 7 (Reuters) – A proposed three-way deal between the Indonesian government, Rio Tinto and Freeport-McMoRan to clean up the ownership of the giant Grasberg copper-gold mine looks like one of those rare situations where everybody wins.

Except that it isn‘t. Certainly all parties may walk away feeling that they have achieved the best outcome, assuming the complicated deal can be pulled off at a price acceptable to all three.

But this ignores the wider picture in which any short-term advantage is likely to be offset by compounding longer-term problems. First, a brief re-cap of what’s at stake. Grasberg is the world’s second-largest copper mine, as well as being one of the five-biggest gold mines, and is further advantaged by having high grades and low costs. Continue Reading →