Resource nationalism surges in 2020 as side effect of Covid-19

In 2020, 34 countries have witnessed a significant increase in the nationalisation of natural resources as a side effect of Covid-19, revealed the latest report by Verisk Maplecroft published late on Thursday.

The report recorded a surge in risk over the past year as measured by its Resource Nationalism Index and concluded that the economic impact of Covid-19 was the main factor aggravating an already growing tendency among governments.

Interventionism in the natural resource sector was particularly evident in countries dependent on minerals and hydrocarbons exports.

The report also forecast that nationalism would increase over the following two years as governments tried to claw back the financial losses incurred by the pandemic with the mining industry expected to bear the brunt of such measures.

Other reasons for increased nationalism, the report argued, would be another mining supercycle which would likely intensify nationalism in Africa and Latin America, which hold some of the largest producers of copper and iron ore.

The countries most at risk were deemed to be Zimbabwe, Liberia, Mexico and Argentina, among others.

Those countries were also the most likely to turn to indigenisation and direct expropriations with no or little compensation.

In Latin America, the main driver for resource nationalism usually comes from ideology or pressure from communities that host mining projects.

In Africa, it was likely that governments would take such measures due to governance shortcomings and not nationalist sentiment.

The report also said that, regardless of Covid-19, the trend towards rising resource nationalism would have continued deepening in 2021 anyhow, particularly in jurisdictions where interventionism delivers a political dividend.