A significant increase in conflict, terrorism and regime instability in the Middle East and North Africa, along with deepened global political violence and resource nationalism, are the main risks mining investors will face in 2014, according to a report published Thursday by UK-based risk consultancy Maplecroft.
In its sixth annual Political Risk Atlas (PRA) the firm tell investors to pay special attention to possible populist moves in Indonesia, Brazil, India and South Africa as national elections in these countries will likely boost resource nationalist rhetoric and policies.
According to Maplecroft close to 10% of the countries studied have shown a significant increase in their risks levels, with foreign investors facing more political violence, resource nationalism and expropriations.
In the last year alone, says the report, the risk of resource nationalism has increased 15% as a consequence of governments attempts to offset the risk of societal unrest through tax increases, tougher regulations or outright expropriation.
Asia and Africa in the hot seat
Maplecroft’s Political Risk Atlas 2014 also reveals that social unrest is likely to increase in politically unstable nations, such as Bangladesh, Belarus, China, Kazakhstan, Saudi Arabia and Vietnam.
Following the Arab Awakening, the study reveals that Syria became the country to fall the most in the firm’s risk index, dropping from 44th place in 2010 to the 2nd position in the 2014 ranking, above only Somalia.
For the first time, Egypt is categorized as “extremely risky,” falling from the 27th spot in 2013 to the 15th this year. The country’s drop in ranking comes as a result of the post-coup violence and increased terrorist activity in the Sinai Peninsula, where attacks went up from 20 incidents of terrorism in 2011-2012, compared to 105 incidents in the period 2012-2013.
Mali (22nd compared to 40th in 2013), and Mozambique (63rd compared with 79th) also experienced significant increases in risk, primarily driven by a dramatic rise in political violence.
Maplecroft’s report includes 52 indices developed to enable companies and investors monitor the key political issues and trends affecting the business environment of 197 countries.