Page 52 - pd280-Mar20-mag-web_Neat

InDABA ReVIeW

Srinivasan Venkatakrishnan

Alert miners

needed to sense

nationalism

he days of outright asset expropriation environment. But
Tmay be over, but miners must remain host communities
vigilant about local and nationwide moods also want a spe-
if they are to avoid value eroding resource cial claim on the
nationalism. resource.
Resource nationalism has never felt “It is a delicate
far from the surface across the African balance and I
continent since the end of colonialism as don’t think any
governments battle to balance the needs country has ever
of poor, under-serviced populations with got it right.”
the desire to attract international capital Gatare said the
to their often-abundant natural resources. balance was further disrupted “Companies made an effort to tackle
The issue has flared up multiple times during periods of tension. the perception which had grown but the
in multiple jurisdictions on the continent “This could be either when there are response was clearly insufficient and cre-
and while it is rare for a government to di- windfall profits [due to higher commodity ated a landscape where political capital
rectly confiscate mining assets, there are prices] and asset transactions, or when could be gained from bashing foreign
many examples of indirect expropriation the market is down and revenue is not companies,” Litvin said.
which has strangled economic growth. forthcoming.” Vedanta Resources plc group chief
Speaking on a panel at Mining Indaba, Daniel Litvin, managing director at executive Srinivasan Venkatakrishnan
World Bank practice manager, energy advisory group Critical Resource said (Venkat) said the mistake too many gov-
and extractives Christopher Sheldon said companies eager to avoid the ravages of ernments made was assuming there was
it was understandable that governments resource nationalism should look for fa- a binary choice between private and pub-
wanted to maximise their natural resourc- miliar signs in their host countries. lic benefits, that their policies would mere-
es for their country’s economic develop- “A lot of the time it is foreseeable but, a ly decide who received the larger slice of
ment, “but there are multiple stakeholders bit like predicting markets, the challenge the pie.
and need to work together if goals are to is knowing exactly when things will hap- “There is a thought that it is a zero-sum
be achieved”, he said. pen,” Litvin told Paydirt. “A growing level game,” he said. “There is not enough dis-
“We not seeing a trend for governments of popular dissatisfaction at the local and cussion about enlarging the pie.”
operating mines but there has been a national level is a strong indicator.” Venkat said promises were often bro-
trend for governments to rethink regula- Litvin pointed to Tanzania – where ken on both sides of the government-in-
tory frameworks – participation, equity, President John Magafuli introduced ag- vestor relationship, leading to deep mis-
fiscal regimes – because of disappoint- gressive resource nationalist amend- trust.
ments over how the benefits have flowed,” ments to the Mining Act in 2017 – as an Litvin sees this mistrust only increasing.
Sheldon said. “Getting the balance right example of the course resource national- “There is deep mistrust, which may be
is the tricky thing but interest in doing so ism could chart. unfair, and a lack of understanding of the
will rise because we believe the future will “It often ties in with election seasons, industry,” he said. ‘The level of stakehold-
be more mineral intensive.” you see a surge in resource national- er trust continues to weaken because of
Rwanda set its stall out at this year’s ism as politicians vie to look like they are domestic political pressures; inequality,
Mining Indaba to entice more foreign in- standing up to foreign companies,” he populist leaders, environmental impact,
vestment into its resources sector. The said. “For many years prior to Magafuli’s etc.”
Government has reworked its investment election there was deep disquiet about According to international dispute
framework to attract international miners foreign investment and the perceived lack resolution expert Sam Luttrell, the mix
but according to Francis Gatare, chair- of benefits for Tanzanians. The result was of mistrust with misunderstanding about
man of the Rwanda Minerals Board, strik- this extreme form of resource national- the economics of mining creates a potent
ing the right tone was difficult. ism.” resource nationalism cocktail.
“Mineral resources can only be utilised International miners were subsequently “Naivety is part of the problem. Coun-
when private capital is deployed so capi- caught out by Tanzania’s political tide with tries make the mistake of thinking geol-
tal must be rewarded,” Gatare said. “The the country’s largest operator, Acacia ogy alone is enough and misunderstand
promotion of private sector investor is crit- Mining, ending up in a legal dispute with the role that law and regulation play in
ical, so you must have business reforms the Government which was only resolved the feasibility of mining projects,” he said.
that give comfort and provide a welcome last month (see pages 33-34). “My impression is that the Tanzanian leg-

Page 52 MaRCH 2020 aUSTRaLIa’S PaYDIRT