How big is the threat of resource nationalism?

The apparent conflict between implementing resource nationalism and attracting foreign direct investment has been coming to heads recently across emerging markets.

The issue at heart lies in increasing the notoriously low benefits yielded to local economies and governments versus the large profits gained by exporting foreign miners.

In light of this conflict Zambia has taken a step back from increasing its government stakes in new projects to 35%. A government official announced that stakes would likely only be considered at 25% versus the previous 10%-15%.

The government did not wish to go on a confrontation course with investors in the mining sector but will still maintain mineral export controls and higher royalties and tax rates.

In contrast Indonesia plans to upholds its moves force firms to invest in processing ores into refined metals. The looming export quotas on unrefined resources are supposed to encourage investments in downstream production to upgrade the economy in the long term.  Developments are bound to become more interesting as mining companies face pressures to invest in expensive refineries while the exports have already dropped considerably. It will remain to be seen whether the strategy will be successful in evolving the Indonesian economy to a more value added model.

Finally India is openly looking for foreign investment into its coal sector. The Indian coal industry is in strong need of more expertise and technologies but faces complicated regulatory hurdles for foreign companies to get involved. Conducting road shows in Singapore and Hong Kong next month the government is trying to actively attract investment.

With a strong focus in national mining companies and governments the Asia Mining Congress in March 2013 will bring many of these the key stakeholders involved in the resource nationalism debate together. Join the conference to witness in depth discussions between governments, national mining companies and the private industry and join in yourself.

For more information on Asia Mining Congress, visit www.terrapinn.com/asiamining