Archive | Resource Nationalism

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 →

Rio Tinto pushes Grasberg deal closure into 2019 – by Peter Ker (Australian Financial Review – September 30, 2018)

https://www.afr.com/

Rio Tinto could be waiting up to nine months for the proceeds of its Grasberg copper divestment to flow through, despite clearing a significant hurdle on the transaction in recent days.

Indonesian state-owned company PT Indonesia Asahan Aluminium (Inalum) signed binding agreements with Rio and its partner Freeport McMoran to reshape the ownership structure of the mine, under a deal that will give Inalum majority ownership and Rio $US3.5 billion in cash proceeds.

But the “binding” deals were said to be conditional on further approvals, including from anti-trust regulators in several nations. Continue Reading →

Economic nationalism is back in Indonesia as election approaches – by (Straits Times – September 17, 2018)

https://www.straitstimes.com/

JAKARTA (BLOOMBERG) – Nothing sells like economic nationalism in Indonesia’s election season. Facing a challenge from a self-proclaimed nationalist, President Joko Widodo has used speeches after his nomination for April’s vote to tout his success in wresting control of the nation’s prized natural resources from foreign companies.

Now the campaign in the lead up to the April 2019 poll is expected to develop into a battle built around economic nationalism. While it may risk a retreat by foreign investors from South-east Asia’s biggest economy, it’s still likely to be a vote winner, according to analysts.

Widodo, known as Jokowi, has carried forward the resource nationalism championed by his predecessor Susilo Bambang Yudhoyono by taking steps to take back assets managed by multinationals such as Freeport-McMoRan Inc., Total SA and Chevron Corp. His government recently ordered all oil producers to sell their crude to state refiner PT Pertamina as it sought to cut imports. Continue Reading →

‘Resource nationalism’ clouds China’s Africa ambitions – by MASANORI TOBITA and TETSUSHI TAKAHASHI (Nikkei Asian Review – June 23, 2018)

https://asia.nikkei.com/

VIENNA/BEIJING — Rising nationalism in African nations over control of resources is starting to overshadow the efforts of Chinese and other foreign companies to develop their operations on the continent.

Some countries are demanding that foreign companies involved in mining invest in local companies, and plan to increase taxes on such foreign enterprises. These countries aim to fill their coffers by reclaiming ownership of mining concessions, anticipating a recovery in global resources prices.

On Wednesday, Chinese President Xi Jinping outlined plans for a tour of Africa in July in an apparent effort to shore up ties with various countries on the continent. The initiative comes as China’s relations with the U.S. have been strained by concerns over trade and security. Continue Reading →

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 →