resource nationalism

No-one likes a large tax bill, especially in arrears.

London-listed Randgold and Mali’s government are heading for international arbitration at the International Center for Settlement of Investment Disputes over a disagreement over around $60m in tax connected to Randgold’s Loulo gold mine. Read more

Critics of Evo Morales, Bolivia’s leftwing president, say his enthusiasm for nationalisation is such that there will soon be no companies left to nationalise. But if Morales has been indiscriminate in bringing the private sector under the state’s wing since he took office in 2006, he has at least been getting selective recently over which former owners to compensate for taking their companies off their hands. Read more

When it comes to natural resources in Africa, coverage tends to focus on the problematic (see Rio in Mozambique), the awkward relationships (see China), the political risk (see Congo) and the collapse in labour relations (see South Africa).

But despite the setbacks, Africa still has vast untapped reserves and lots of potential. So what should investors look out for in the next few years? Research from Ecobank has identified six themes. Read more

Kenya may have avoided the dreaded ‘resource curse’ afflicting many of its African peers, but that leaves the government with painful revenue-raising choices, such as the controversial recent attempt to raise taxes on mobile money transfers.

But the country might not be as resource-barren as it once seemed. Read more

Rio Tinto may have breathed a sigh of relief on Wednesday when Guinea’s mining minister, Mohamed Lamine Fofana, admitted it would miss a production target of 2015 due in part to the infrastructure challenges of the Simandou mega-project.

But Guinea’s president, Alpha Condé, on Friday overruled Fofana, insisting there was no change in the timeline. So the time pressure is back on then? Read more

By Julian Dierkes of the University of British Colombia

With three candidates declared for Mongolia’s presidential election a month from now, one of the issues that will be watched most closely from abroad is the candidates’ positions on large-scale mining projects. Much (foreign) ink will be spilled describing all three candidates as “resource nationalists” of various stripes. Read more

Zambia’s government is the latest in sub-Saharan Africa to propose measures to claw back a bit more of the wealth extracted by foreign mining companies. But this time it’s not the proceeds of a major commodity like copper that are in the spotlight, but the rather more niche trade in emeralds.

Zambia is the third largest producer of the gemstone after Colombia and Brazil, and last Friday Yamfwa Mukanga, mining minister, gave mining companies a jolt when he said that any emeralds dug up in Zambia will have to be auctioned there from now on, too. Read more

Another bolt from the blue for oil producers in Kazakhstan.

Customs duties on crude oil exported from the central Asian country are to rise by 50 per cent later this month in a move that underscores the unpredictability of the tax regime. Read more

Can I nationalise you?

For a country with a fondness for nationalisations and getting its way, going to full arbitration might feel a little, well, odd. Bolivia has been placing companies under state control on and off since May 2006.

So how did UK-based power company Rurelec manage to get Bolivia to go to the Permanent Court of Arbitration in The Hague over the nationalisation of the assets of its local subsidiary, Guaracachi, almost three years ago? Read more

Resource nationalism is a growing threat for companies in many emerging markets. The challenge for investors lies in distinguishing between arbitrary or predatory interventions, and legitimate attempts to clean up a broken system.

In Guinea, a mining code reform, an unchecked executive and simmering political tensions have prompted some risk analysts and lawyers to raise alarm bells. Are they justified, or is this a case of the country getting things straight? Read more

Randgold chief executive Mark Bristow has criticised a “disturbing” tendency among African governments to increase taxes and regulations on mining investors, as the company disputes its tax bill with the Malian government.

The chief executive of the FTSE 100 gold mining company, which has operations in Mali, the Democratic Republic of Congo and Ivory Coast made his statement at the Mining Indaba conference currently taking place in Cape Town. He claimed that revisions to mining laws risked deterring investment on the continent. Read more

By Julian Dierkes of University of British Columbia

With the increased level of interest the world has taken in Mongolia given its blistering economic growth rate, resource nationalism is mentioned more and more often as a threat. But what exactly is this resource nationalism?

In Mongolia there is a parade of ideologies and slogans that are being lumped into the category of resource nationalism. They range from the obscure fringes of blood-line focused nationalism to the concerns of dedicated and serious politicians who are genuinely grappling with the challenges that rapid, almost instant, economic growth on the basis of a resource boom is bringing with it. Lumping these different streams together into a single category suggests that there is a coherent ideology that unites them. This is not the case. Read more

By Bernice Lee of Chatham House

Resource insecurity is back with a vengeance. It is time for world leaders to respond to burgeoning demand from emerging economies, which has driven up commodity prices and made them more volatile, and led to supply disruptions, environmental degradation and political tensions.

Governments have mostly reacted with unilateral – and often myopic – policies, alongside vague attempts at collaboration. This is not enough. The world’s top resource-producing and resource-consuming nations should establish a Resources 30 (R30) Group, and cooperate in managing global natural resources. Read more

The vast deposits of copper, coal, gold and silver under Mongolian soil could soon be governed by a radically different regulatory framework — if a new draft of the country’s Minerals Law is passed in its current form. Read more

Resource nationalism isn’t just the expropriation of major companies or industries, like YPF in Argentina – it also takes subtler forms. James Smither, associate director at risk consultancy Maplecroft, explains to Rob Minto how shifts in commodity prices can undermine a country’s resource leverage and the more nuanced ways revenue can be retained within domestic borders.

Whether you call it resource nationalism or getting a fair share of your natural resources, when countries introduce local ownership regulations it can hit foreign investors hard.

The latest case is Base Resources, a small-cap listed in Australia, with a flagship project in Kenya – Kwale Mineral Sands. Kenya’s mining ministry wants a local equity stake of 35 per cent of all mining licences. The market reaction? Base shares fell 36 per cent on Monday. Read more

After the mammoth battle between Codelco and Anglo American, resource nationalism is back on people’s lips in Chile.

But this time it’s lithium, not copper.

SQM, a Chilean company and the world’s biggest producer of the mineral that is used for smartphone batteries and hybrid cars, has won a tender to develop a lithium concession in Chile after beating other offers with its $41m bid to develop the concession for a 20-year term. Keep it in the family, as it were? Read more

Mongolia and China have never exactly gotten along. For the past millennium the two countries invaded and ruled each other in turn. In the thirteenth century, Kublai Khan swept into China and founded the Yuan dynasty, putting Mongolians on the Chinese throne for nearly a century. Then in the 17th century Mongolia was conquered by the Manchu-led Qing dynasty.

Both have gone their own way for the past hundred years, but the history lesson is worth remembering, because Mongolia’s mining development today is dependent on its giant, resources-hungry neighbour. Read more

Mongolia’s tough new foreign investment law has claimed its first big victim. As had been widely expected, it was confirmed on Monday that Chalco, the Chinese state-controlled aluminium company, had dropped a $926m bid for a control of SouthGobi Resources, a Hong Kong-listed coal company with a big Mongolian mine.

The company cannot go ahead in the face of tough political opposition in Mongolia which in May passed a law limiting foreign ownership in mining and other strategic sectors following Chalco’s original bid. Read more

To the frustration of the mining houses operating in South Africa – including many of the world’s largest – a debate about the nationalisation of the country’s mines has ebbed and flowed, but never quite died.

This is in spite of the fact that a number of top government officials, from President Jacob Zuma down, previously insisting it was not the policy of either the government or the governing African National Congress. Read more