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A dump truck travels along an access ramp of the Invincible mine at the St Ives Gold Mine operated by Gold Fields Ltd. in Kambalda, Australia, on Wednesday, Aug. 9, 2017. Global gold deals have also slowed, declining to $19.8 billion in 2016 from $22.8 billion a year earlier, according to data complied by Bloomberg.(bloomberg)
(Bloomberg) -- A rising tide of resource nationalism is causing miners to rethink where they invest and creating volatility for a sector already buffeted by brewing trade wars.
“A significant industry issue is resource nationalism,” Rio Tinto Group Chief Executive Officer Jean-Sebastien Jacques told investors at a conference in Miami this week. “From the DRC and South Africa to Mongolia and Australia, it is gaining momentum. As a result, the case for investment and FDI is clearly under threat.”
Among the most epic battles is Freeport-McMoRan Inc.’s fight to secure long-term rights to its flagship Grasberg copper-and-gold mine in Indonesia. Its joint venture partner, Rio Tinto, is in talks to extricate itself by selling its stake to local interests.
The tide is particularly strong across Africa, where a long list of miners are negotiating with politicians threatening to upend long-standing agreements in order to reap greater economic rewards from local resources.
In the last week, shares of Kinross Gold Corp. were slammed by news that governments in Mauritania and Ghana were considering changing the rules. There is a “fire burning” across Africa, Kinross CEO Paul Rollinson told investors at the same Miami conference.
Barrick Gold Corp.’s majority-owned Acacia Mining Plc is considering selling stakes in its Tanzanian mines as it fights a $190 billion tax bill. In the Democratic Republic of Congo, mining executives including Glencore Plc’s Ivan Glasenberg and Randgold Resources Ltd.’s Mark Bristow have rushed to speak directly with President Joseph Kabila about new mining rules. First Quantum Minerals Ltd. has its own ongoing tax dispute in Zambia.
The spike in nationalism comes as commodities strengthen and rising trade tensions put more pressure on prices. The outlook for global growth is positive, but volatility, trade wars and resource nationalism “are all sources of uncertainty,” Jacques told his audience.
--With assistance from Aoyon Ashraf .
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