Resource Nationalism: The new global economic rent

The global financial crisis led to massive budget deficits as many governments injected cash to their economies by way of massive stimulus packages. At the same time, minimized tax collection during and after economic crisis reduced government revenues dramatically. The Business Risks Facing Mining and Metals report identifies resource nationalism as the fourth-greatest strategic business risk the sector is facing (up from ninth place in 2009). The report identifies how mineral-rich countries are renewing efforts to ensure that they are extracting sufficient economic rent, including royalties, taxes and duties, for the right of a mining company to exploit their resources. The mining and metals industry should address this reviving trend by assessing how political risk affects corporate strategy and business processes. To limit the challenges associated with resource nationalism, mining and metals companies need to forge strong, transparent relationships with foreign governments to communicate their needs and to facilitate the development of projects.