Resource Nationalisation Fires Up: A Warning for | Australian Markets

Resource nationalisation is a subject I keep coming back to; it’s popping up in every single place lately. But what precisely is it?

At its most excessive, it includes the forceful takeover of a mine, often by a army ‘junta-like’ authorities.

Turfing out the multinational that spent hundreds of thousands developing the project.

Sometimes, this occurs with out warning, just like the Frontier Mine within the Democratic Republic of Congo.

Formerly owned by the Canadian producer First Quantum, the DRC authorities despatched its army to take control of the mine in 2010.

At the time, it was the biggest copper mine within the nation.

But typically useful resource nationalisation takes on a ‘slow death’ for the multinational… Where the host authorities progressively erodes the company’s will to operate, leaving them no alternative however to desert their asset.

That’s what’s taking place with Barrick’s Loulo-Gounkoto mine in Mali, a gold project below care and upkeep since native officers threatened to arrest Barrick executives, seized the company’s bullion, and demanded punitive royalties.

This operation has grow to be unviable for Barrick to proceed.

Yet, useful resource nationalisation is usually far more refined…

Like greater royalties or obligatory purchases, giving the state more control over its natural assets.

But no matter type it takes, operators hate the phrase nationalisation and are able to stamp out any signal of it as quickly because it emerges!

Which is why this text from the native newspaper, Kalgoorlie Miner, caught my consideration final week…

According to the piece, the Shire of Coolgardie in WA’s Eastern Goldfields proposed growing its native mining tax to spice up funds by round $8.7 million yearly.

That resolution has stirred an uproar among the many native mining operators!

Multi-billion-dollar giants like Gold Fields, which owns the St Ives mine south of Kambalda, and Evolution Mining, Australia’s second-largest gold miner, have staunchly opposed the hike.

So have another massive hitters like Andrew Forrest’s backed Wyloo Metals, Chris Ellison-led Mineral Resources, and Tim Goyder’s Minerals 260.

So, why are these bigwigs in such a stir over what’s a comparatively trivial cash-grab by the native shire?

Mining Memo’s Take

No matter what type it takes, operators will do all the pieces they’ll to forestall greater royalties, taxes, or anything that smells like useful resource nationalisation!

You may argue that the Shire is properly within its rights right here, given the elevated stress on its roads and different native infrastructure attributable to the ramp-up at these mining tasks.

Yet, these main mining outfits will do all the pieces potential to stamp out these ‘spot fires’ or risk having different jurisdictions implement one thing comparable.

But in phrases of traders, the important thing factor to notice right here is that useful resource nationalisation is heating up, nearly in every single place.

That’s why I keep coming back to this important level… Whether it’s a army junta seeking to grab maintain of a mine or simply the native Shire wanting so as to add more money to its coffers…

Resource nationalisation (in all its types) rises when the commodity cycle turns upward. And there are indicators of it in every single place proper now.

Stay tuned.

Regards,

James Cooper,
Editor, Mining: Phase One and Diggers and Drillers

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Please search unbiased financial advice concerning your own scenario, or if doubtful in regards to the suitability of an investment.

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