Resource nationalism assumes more insidious forms

Resource nationalism is assuming more subtle forms as governments resort to measures outside of blatant asset expropriations to retain the benefits proffered by their geological bounties.

In an interview with the Financial Times (paywall) James Smither of risk consultancy Maplecroft says traditional outbursts of resource nationalism, usually in the form of headline-grabbing asset seizures such as Argentina's expropriation of Spanish oil company YTF this year, are gradually giving way to more subtle measures.

These measures would include ramped up mining taxes and royalties, and the implementation of more stringent local procurement and employment requirements during the resource extraction process.

First world countries are not exempt from these new and more subtle measures, with heightened resource taxes introduced this year by the UK in the North Sea and by Australia with the highly controversial MRRT at a Federal level and increased mining royalties in Queensland.

The greatest risk with respect to resource nationalism remains concentrated in emerging markets, however, where the rule of law is weak and development imperatives far stronger. Countries categorized by Maplecroft as harboring extreme risk for resource nationalism include Bolivia and Ecuador in South America and Guinea and Zimbabwe in Africa.

Smither also points out that resource nationalism is a potential peril in Central Asia, where the Mongolian state has interfered extensively in the mammoth Oyu Tolgoi mine and Kazakhstan has imposed a 50% local procurement requirement on overseas miners.