A study conducted by Verisk Maplecroft, a global risk research firm, revealed that resource nationalism is currently happening in 34 mineral-rich countries. The findings denote that mining companies that have investments in these countries are likely to face tougher challenges, as governments turn to resource nationalism as a means to recover the losses sustained from the pandemic.
According to the report released by Verisk Maplecroft, more than half the countries that have been introducing policies geared toward resource nationalism are heavily dependent on hydrocarbon and mineral exports, particularly copper and iron
The report stated that in many African and Latin American countries, governments are now implementing interventionist measures such as direct expropriations of mining resources; whilst affording lower compensations to mining organizations. The term expropriation means that private properties are being claimed by governments, to promote indigenization or native use.
As a consultancy firm, Verisk Maplecroft warns that the risk of resource nationalism is bound to heighten, while interventionist measures could become more drastic as part of post-pandemic economic recovery plans.
As presented in Verisk Maplecroft’s Resource Nationalism Index (RNI), major mineral producing countries like Canada, Chile, Mexico and Mali are now implementing subtle government intervention actions . More countries are likely to follow suit, as governments like Brazil and Chile had already taken similar steps during the latter part of 2019 in order to fill funding deficits.
What Exactly is Resource Nationalism?
Resource nationalism is a propensity exhibited by the government and its people, toward taking control of the natural resources in their jurisdiction; mainly as a strategic action for advancing economic, political or social goals. It places emphasis on the premise that the people of the country should first and foremost be the beneficiaries of such resources, which makes it necessary for the government to take control and to assume management of its natural resources.
More often than not, measures implemented to impose resource nationalism are contradictory to the objectives of multinational companies that have made investments in developing natural reservoirs mainly for purposes of extracting resource products like metals, minerals and fossil fuel.