According toa recent report from Ernst & Young, the increasing global demand for commodities is encouraging resource nationalism, defined as national governments taking control of the country’s natural resources. Resource rich countries will benefit from the resulting increased price of exports, says the report, but countries that rely on imported resources could suffer badly.
China’s dependence on African resources is likely to grow, with ever more Chinese companies scouting the continent for the raw materials they need to maintain growth, but while Africa stands to benefit from the rise in demand for commodities, it also presents the continent with risks. The Ernst & Young report describes resource nationalism as the number one risk for the mining and metal sector in 2011, which “became an early target to help restore treasury conditions…because the mining and metals sector rebounded quickly from the global financial crisis.”
Namibia is one example of an African country that has made resource nationalism a part of its economic plan. The Namibian government has given the nationalised mining company, Epangelo mining, the exclusive rights to mining and mineral exploration. Epangelo, with its limited budget, will create partnerships with other companies, but will always hold the majority share, in order to have control over the mines. This has significant implications for China. The Namibian government have been rethinking their Sino-African ties, and now wants China to add value to Namibia’s raw materials domestically.
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