Resource Nationalism Should Unite, Not Divide

By Menell, Brian | African Business, February 2012 | Go to article overview

Resource Nationalism Should Unite, Not Divide


Menell, Brian, African Business


Resource nationalism has become a much-discussed topic in the mining world of late, but while the debate has created a fair amount of heat, it has done less to shed light on how businesses and governments could work together.

Given the rapid rise in commodity prices across the world, it is not surprising that governments in Africa are looking to their natural resources to boost revenues, provide jobs for their citizens and mitigate the effects of higher food prices. Given the increasing democratisation of the continent, citizens are better placed than ever to push their governments to turn this pressure into action.

Of course, talk of resource nationalism makes mining companies very nervous very quickly. And there is an instinct, especially among those who have been burnt in the past, to fight against the trend. But governments and mining companies need to remember that they have a shared interest in a long-term, sustainable natural resources industry. So companies that react simply by fighting governments are sacrificing their long-term interests to short-term concerns.

Indeed, the old caricature of authoritarian governments playing a cat and mouse game with cowboy businesses looking to make a quick buck is now out of date, if indeed there was ever any truth in it. The increasing de-mocratisation of the African continent has meant that governments are increasingly sensitive to popular pressures. Likewise, moves to pursue more rigorous enforcement of 'use it or lose it' regulations reflect government attempts to discourage opportunistic, short-termist approaches. In the context of this new landscape, both mining companies and governments have an interest in creating long-term partnerships that will provide greater stability for investors worried about returns and a longer-term picture for governments looking to create wealth for their people.

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Rather than being distracted by fears of government takeover, mining companies should use this opportunity to push for a settlement that gives all parties an interest in making the project successful.

Four key principles

One way in which this can be achieved is through government investment via mining-specific sovereign wealth structures, forming true partnerships, not takeovers, the success of which is dependent on four key principles: transparency, fairness, stability and limitation.

As well as being transparent about their operations, mining companies invested in Africa should be doing more to educate the citizens, media and politicians - owners of the country's natural resources - about the benefits of foreign investment. …

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