In countries as diverse as Peru, the UK, Tanzania, South Africa, and Australia, governments have been seeking to capture greater returns from resource extraction. Measures considered or implemented include windfall taxes, higher royalties, bigger equity stakes for the state, or (at the extreme) nationalisation. ‘Resource nationalism’ can be an unhelpful term for this trend, suggesting an irrational, emotional response by governments – maximizing resource revenues may be perfectly rational on their part. Equally, however, ill-thought-out government actions can deter investment in resource projects, killing the goose the lays the golden egg.
How should resource firms respond? Some drivers of the trend – e.g. commodity prices – are clearly beyond companies’ individual control. But our experience from advising clients (using the LicenseSecure Navigate service and our database of 100+ projects ) suggests that some responsible tactics can help pre-empt, or at least soften the blow of, resource nationalism. The list below is broad-brush, in contrast to the detailed strategies we develop for clients, and is intended simply to provide some food for thought.