Friday, July 27, 2012

Is it really resource nationalism?

Resource nationalism is really economic nationalism.

Think about it.

The size and complexity of our economic and communications world has expanded exponentially but the economies in it have not and see the American version of the free market for what it is: greed and power.  And that's what they want too, the what-used-to-be the American Dream.

It should come of no surprise that they want what they see as theirs within the boarders of their country.   in order to be able to play well with others.

We are seeing is the emergence of new realities in markets and governments.

I feel sorry that companies are getting caught in the sea change that began at the turn of the century.

Don't get mad about it and realize that the big cop on the block, the USA, simply can't threaten, cajole or control this new world in the process of reordering itself.

Investors need to learn to see things as they are and seek insight into how to benefit from this.

It is my opinion that investors should be choosing jurisdictions that will protect their investments and flee those that do not.  It is that simple.  And their are a lot of options for them in stable jurisdictions.

The article below is from the local business paper in Vancouver, 'Business In Vancouver' about local companies in the mining and exploration business internationally.  It talks about how companies are trying to protect their "assets in foreign lands with legal agreements and key relationships".

But remember politics and corruption can trump any of these.


Rising tide of resource nationalism threatens Vancouver miners

Tue Jul 24, 2012 12:01am PST
Companies protecting assets in foreign lands with legal agreements, key relationships

High commodity prices and a shaky world economy are intensifying Vancouver mining companies’ clashes with resource nationalism.

Two recent examples include Bolivia’s recent threats to nationalize South American Silver Corp.(TSX:SAC) and Rusoro Mining Ltd.’s(TSX-V:RML) July 18 announcement that it is filing for arbitration after Venezuela nationalized the company’s investments.

A Ernst & Young LLP’s recently releasedglobal survey identified resource nationalism as the top business threat facing mining companies for the second year running. In 2008, the risk ranked eighth on the survey.

Tom Whelan, leader of Ernst & Young’s national mining and metals practice, said the forces driving the trend aren’t hard to identify.

“Every government treasury around the world is under difficult circumstances, and if you look at [high] commodity prices and some of the earnings of the major mining companies … it’s easy to see why there’s a target,” he told Business in Vancouver.

Whelan said companies can protect their assets against the threat in a number of ways.

“It starts with building transparent relationships with the host government so that they understand the entire value of the project to the host government.”

He noted that companies should emphasize everything from tax dollars to infrastructure developments and jobs that projects bring.

Fred McMahon, the Fraser Institute’s vice-president of international policy research, said mining companies need to engage positively with local communities in a project area.

Beyond playing nice with governments and communities, however, companies are seeking legal mechanisms to protect their projects.

Chris Baldwin, a partner with Lawson Lundell LLP, noted that resource nationalism can span everything from tax increases to outright seizure of company assets. He said the key legal protection companies can obtain from a host government is a stability agreement.


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