Resource nationalism is biggest risk to miners: report
LONDON (Reuters) - Resource nationalism is the biggest threat facing the mining sector this year and next as governments seek to take advantage of higher commodity prices to try to restore fragile finances, advisory and accountancy firm Ernst & Young (E&Y) said on Sunday.
"Because the mining and metals sector rebounded quickly from the global financial crisis, it became an early target to help restore treasury conditions," the firm said.
E&Y said it had identified at least 25 countries in 2010/11 that had increased, or announced plans to increase, their government take via taxes or royalties. Governments have also been looking to lift local participation in projects, a trend E&Y thinks will only increase.
Global miners Anglo American and Xstrata criticised resource nationalism in recent result's statements as concern grows over the topic.
Australia has announced a controversial plan to tax carbon pollution , Peru and Tanzania are both considering windfall taxes, while South Africa's new royalty regime came into effect in March, E&Y noted.
The lack of skilled staff remained the second-biggest threat to the industry with Australia alone needing an additional 86,000 workers by 2020, it said, citing the Minerals Council of Australia.
A shortage of skilled labour is also a factor behind the highest new entry in the top 10 list, with capital project execution coming in at number five at a time when some companies are spending as much as $100 billion on expansion plans.
Other new entries include supply interruptions - mainly due to the number of natural and environmental disasters over the past year - and fraud and corruption as miners have moved into riskier countries at a time of tighter regulations.
© Thomson Reuters 2017 All rights reserved