Higher raw material prices provoke nationalism

The sharply higher raw material prices this year are going to bring about more so-called resource nationalism of the raw material-rich countries. . The spurt in industrial metal prices and the sharp rise in oil and grain prices this year have made the mineral resources of these countries much more valuable. These mineral resources thus become a resource for the raw material-rich countries with budget gaps that are difficult to fill.

Commodity nationalisation and commodity prices

There are different degrees of resource nationalism: direct and indirect. Commodity-rich countries can opt for quota requirements, revision of existing mining contracts, higher regulatory requirements and increases in taxes or royalties on the commodities. These are more indirect ways of state intervention. 

The more direct way often has somewhat larger consequences. Here, the most rigorous way is complete expropriation. This has happened a lot in Venezuela, for example, in the oil sector and in agriculture. However, resource nationalism can also be expressed through stricter controls on or exclusion of foreign participation. In addition, a government can impose compulsory state participation and favouritism or can impose requirements for the further processing of raw materials. 

The nationalisation drive in commodity markets by some countries is again in the spotlight. In any case, the subject is high on the risk rankings of mining companies. This brings the market dynamics to a higher level again.

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