Where To Next: Resource Nationalism

Sander Grieve writes in Canadian Mining Journal on steps being taken by governments, including Canada's, to have more of a direct interest in the extraction of their country's mineral resources. The toolkit includes the following:

1. Foreign investment reviews and divestiture orders: Canada, an open economy, with a huge reliance on foreign direct investment, recently went “all in” on restricting investment. The government published new advice on critical minerals with an advertised hostility to state-owned enterprises (SOEs). As though to make the point more directly, they ordered three divestments by minority shareholders in lithium companies. The investors in question were Chinese SOEs. What does this mean for a country reliant on foreign direct investment? What does it mean for the future opportunities to finance companies in Canada? We are implementing a no-fly list, but without transparency on how future financing needs will be met and what the impact will be on valuations.
2. State ownership: Chile, Zimbabwe, and Mexico have publicly announced that lithium will be nationalized. This is the most aggressive of all responses, but it is likely to spread as countries seek security that they alone will control the critical mineral opportunities inside their borders.
3. Export controls: Export controls are on the rise as host countries look to benefit from their resources and, more importantly, leverage them into domestic supply and vertical integration of their economies up the value chain of the battery economy. The OECD identifies total export controls on industrial raw materials surging from 3,337 to 18,263 between 2009 and 2020. The message is increasingly clear; you might own it, but you cannot have it.
4. Public incentives: The Government of Japan has announced that it will subsidize up to 50% of the cost of mine development and smelting projects undertaken by Japanese companies in critical minerals. The subsidies will include geological surveys and technical reports as to feasibility. A key condition will be a commitment to continue operations for no less than five years. Enforcement of this condition remains a new frontier for state action.