Is resource nationalism inherently bad?

CEO of the world’s second-largest mining company Jean-Sébastien Jacques, Rio Tinto, an Australian-British multinational, has warned that rising resource nationalism is a growing concern for miners.

His comments come amid a wave of government crackdowns on mining companies internationally, including in Africa.

In the Democratic Republic of Congo the government is pushing through a contentious new mining code which will see royalties spike, while also declaring some resources “strategic” assets.

In Tanzania president John Magufuli is overseeing a crackdown on the industry which has included a ban on exports of copper, silver, iron and nickel ore in a bid to promote local value-added industries. The country is also looking to up the amount of tax mining companies pay. Last July it slapped a US$190 billion tax bill – four times Tanzania’s GDP – on Acacia, its biggest gold miner.

Magufuli has made it clear he does not like mining companies, saying they have “stolen” the country’s minerals. 

Earlier this year Zambia joined the fray when it demanded that Canada’s First Quantum Minerals pay US$8.04 billion in owed tax. Unsurprisingly, mining companies are not enthusiastic, but is resource nationalism inherently bad?

Perhaps even more important is that miners have, for a very long time, been getting the better of African governments. Companies have sought to position themselves as victims in places like the Democratic Republic of Congo and Tanzania, but the reality is that many mineral-producing African countries have a history of signing deals that disproportionately favour mining companies.

Rebalancing the relationship

It need not be so. In each of the countries mentioned above miners have, reluctantly, engaged in discussions, suggesting there is a middle ground. The aim should be to seek this out as. Whether they like it or not, miners and governments need each other.

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