Wave of ‘resource nationalism’ in wake of downturn in bulk exports

Trade pacts doing away with tariff protection signed during the heady days of the commodity supercycle are being shredded as countries resort to “resource nationalism” in order to support their local mining industries, according to the latest PwC annual review of the top trends in the global mining industry.

The review analyses the financial performance of the Top 40 mining companies by market capitalisation.

It predicts that the price of bulk commodities is not likely to recover any time soon: “A slowdown in China’s economic growth - to around 7% from double-digit growth in recent years - is expected to weigh on the industry in the months to come.
China accounts for as much as 40% to 50% of global commodity demand.

It adds that the commodity price downturn has also sparked a wave of “resource nationalism,” as governments seek to maintain their mining revenues, despite shrinking overall returns across the industry.

Initiatives implemented to date have been mainly negative for the industry, including tax and/or royalty rate changes and the introduction of mandated beneficiation in-country, as was done in Indonesia.

Pressure on the South African government to reduce the bulk importation of cut-price Chinese steel products came after the report was completed.