Resource nationalism is not a new issue for the global commodities market, but it is rapidly becoming a major concern in the mining sector
In the 1970s, it was common for oil and gas companies to be under state control through taxation, nationalisation and even international cartels. Mining in this period as a whole escaped the attention of governments, partly because of its dominance by powerful private multinationals.
The more recent phase of government interest in mining began within the last decade. Commodities generally suffered tax increases between 2003 and 2008 as governments sought a larger share of profits.
This interest faded quickly when prices collapsed in the face of the global recession, but with demand now once again outpacing supply, the mining industry is facing stronger challenges from resource nationalism.
These challenges take one of three forms. A regulatory strand of resource nationalism has developed, with governments not seeking ownership of mining companies for themselves but very keen to assert where it should reside.
This form emerged last year, with the Canadian government stopping BHP billiton’s bid for the potash Corporation and the Australian government preventing the same business from pursuing a joint venture with Rio Tinto.
A fiscal form of resource nationalism also gathered pace last year with Australia threatening a super tax on profits while other countries, such as Chile, Zambia, Tanzania, south Africa and Burkina Faso introduced similar taxes on mining.
This represented a more direct attempt to assert that more money earned from a nation’s resources stays within the country in which it is mined.
The third and more assertive form of control, nationalisation, remains more rhetoric than reality at this stage, but there are early warning signs of possible action, particularly in Africa.
In south Africa, for example, there have been calls for full state control from elements of the ANC but this stance is backed neither by President Zuma nor the mining unions.
Even so, mining businesses based in Africa will need to demonstrate closer bonds with the countries in which they operate if they are to avoid a future in which ownership is forcibly transferred.