"Resource nationalism sweeps Latin America\u2019s top mining countries"

" \n Resource nationalism sweeps Latin America\u2019s top mining countries \n \n\n \n A\u00a0move\u00a0towards resource expropriation, tax and royalty increases, as well as demands for local participation in companies\u2019 ownership, \u00a0all\u00a0resource nationalism\u00a0components, continue to increase, with Latin America\u00a0taking centre stage,\u00a0a new study shows. \n \n\n \n According to the latest\u00a0report from\u00a0 risk consultancy Verisk\u00a0Maplecroft,\u00a0 there is a clear\u00a0four-year\u00a0trend\u00a0in\u00a0minerals-rich nations to seek greater control over the revenues generated by their natural resources, which is expected to increase over the next two years.\u00a0 \n \n\n \n The consultancy identified 66 countries\u00a0out of the 198 included in\u00a0the resource nationalism index (RNI), or 33% of them,\u00a0that have tightened the grip on their riches\u00a0since 2017.\u00a0\u00a0 \n \n\n \n Latin America is the jurisdiction where risks of expropriation and taxes hikes have increased the most, the study says. Mexico stands out as seeing the nation where the risks have climbed the most, driven by L\u00f3pez Obrador administration\u2019s nationalist agenda that wields community and environmental arguments as justification for greater state involvement in the extractive sector, Verisk Maplecroft says. \n \n\n \n Mexico\u2019s\u00a0situation\u00a0is indicative of a wider regional trend affecting\u00a0miners and energy firms\u00a0in the region.\u00a0South America\u2019s three largest economies, Brazil, Argentina and Colombia are also experiencing substantial negative shifts in the index, while the once stable mining destinations of\u00a0Chile and\u00a0Peru are\u00a0in the midst of\u00a0political changes that\u00a0threaten to\u00a0alter the\u00a0operating environment for the industry.\u00a0 \n \n\n \n Courtesy of Verisk Maplecroft. (Click to enlarge) \n \n\n \n Copper prices have soared to\u00a0 record highs \u00a0this year, handing unions in the two largest producers of the metal \u2014 Chile and Peru \u2014 additional leverage. The price rally has also ratcheted up tensions in labour negotiations and put\u00a0 pressure on global supply of the red metal .\u00a0 \n \n\n \n Read This: Nigeria: The fine line between directors\u2019 dealings and insider trading \n \n\n \n Verisk Maplecroft\u2019s RNI tracks incidents of direct expropriation and nationalization. The highest scores go to cases where there hasn\u2019t been adequate compensation, no compensation, or in which a government hasn\u2019t paid an award to a company following arbitration. \n \n\n \n The ten highest risk countries in the latest edition of the index are Venezuela, Tanzania, Mexico, PNG, Zambia, Russia, North Korea, Kazakhstan, DRC and Zimbabwe.\u00a0\u00a0\u00a0\u00a0 \n \n\n \n The motive behind direct expropriation could be short-term political gain or a genuine attempt to save a vital but ailing industry to support the national interest. \u201cThe adequacy of compensation is the key factor from a business perspective,\u201d the consultancy says. \n \n\n \n Politics and community pressure \n \n\n \n In Latin America, the push to gain greater benefit from natural resources generally hinges on two factors. In Mexico and Argentina, the main driving force is ideology, while in Colombia and Chile pressure comes from communities \u2014 both those hosting mining projects and civil society. \n \n\n \n \u201cWhile the traditional bastions of stability for Latin America\u2019s mining investors are not yet crumbling, they appear to be joining their regional peers on the path of greater resource nationalism,\u201d the report reads. \u201cOnly time will tell how far each one goes down this road.\u201d\u00a0 \n \n\n \n In Africa, motivations are much more diverse. The interventionism seen in Liberia and Mauritania is driven by structural governance shortcomings, not nationalist sentiment, Verisk\u00a0Maplecroft\u00a0points out.\u00a0 \n \n\n \n The line between resource nationalism and legitimate national interest isn\u2019t always easy to draw, and this can exacerbate tensions. \n \n\n \n What is key for miners, according to the report, is to detect the signals early on, so that companies can adapt their investment strategies and exploration portfolios to mitigate future exposure to nationalism trends. \n \n\n \n By doing so, the consultancy concludes, companies can also prioritize investment in jurisdictions where they can be part of the solution. They can work with local stakeholders to find a balance between community needs and industry profitability to secure long-term social license to operate. \n "

"Resource nationalism sweeps Latin America\u2019s top mining countries"

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