We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Tuesday, 28 January 14
RESOURCE NATIONALISM OR PROTECTIONISM FOR THE MINING AND EXTRACTIVES INDUSTRY - JOHN WHITTAKER & MICHAEL SWANGARD
 Resource nationalism or protectionism for the mining and extractives industry as well as soft commodities sector and the oil industry.
‘Resource nationalism’ or, ‘protectionism’, is one of the major issues affecting the commodities markets today. The state introduction of legislation to protect the ownership and management of natural resources is not a new phenomenon. It has, however, been on the rise over the last few years, particularly in Asia. John Whittaker and Michael Swangard, trade & commodities partners at Clyde & Co, examine the issues.
The mining and extractives industry is particularly vulnerable to the uncertainty, risks and costs associated with resource nationalism, but the phenomenon is also an ever present threat in the soft commodities sector and the oil industry. Ongoing volatility in the global economy means that governments are looking to companies to fund the shortfall in revenues and to regain control over natural resources.
Although the natural resources within the territory of a state ultimately belong to that state and its people; certain rights over these resources can be ceded to businesses to allow the resources to be exploited and the benefits realised. When a state lacks the financial, technical or administrative expertise required for the sole exploitation of its resources, investment from large international organisations is often vital. However, resource nationalism is often determined by the prevailing economic and geo-political circumstances in that country and the value of the commodity concerned.
Indonesia, for example, is an important player in the global mining industry. It is one of the world’s largest exporters of thermal coal, nickel and tin. The mining industry is also very important within Indonesia; it contributes between 5 – 6 percent of Indonesia’s total GDP, and in particular provinces of the country, mining forms a much higher percentage of the local economy. In recent years, the Indonesian government has sought to secure greater control by suppressing the export of non-value added (raw and unprocessed) mining products, such as mineral ores. In September 2013 however it reversed its thinking as these nationalistic resource rules threatened to slash mining exports from January and widen a current account deficit which is already at a near-record high.
China meanwhile continues to pursue its policy of imposing export quotas on Resource nationalism rare earths despite their declining price and demand. This policy has raised allegations that the Chinese government is artificially orchestrating the increase in the price of rare earths, prompting the US, EU and Japan to jointly file a complaint with the WTO in March 2012. In response, China has argued that its actions were taken to ensure sustainable development and environmental protection. Protectionist policy is likely to be kept under review by governments in the region while economic uncertainty persists – resulting in more disputes between host governments and foreign investor companies. This means we can expect a rising tide of litigation and increased diplomatic tensions, particularly as state-owned enterprises (SOEs) and Sovereign Wealth Funds invest more in resource projects overseas.
Feeling the consequences
Even where no barrier or restriction exists, the spectre of resource nationalism is sufficient to dissuade many potential investors from ‘going to the source. ’Resource nationalism can increase both sunk and prospective costs thereby damaging the viability of certain projects. These costs include tax and royalty payments; heightened financial costs and insurance payments (due to the increased risk); export duties; and the cost of setting up the infrastructure required to exploit the raw materials.
Projects have undoubtedly been deferred and delayed, and in some cases investment withdrawn altogether, because of the degraded ‘risk/reward equation’ brought about by resource nationalism.
Managing the threat
As long as the current geo-political and economic conditions prevail, states will have the upper hand and the shadow of resource nationalism will hover over the commodities market. In order to deal with this risk, businesses need to consider how best to manage and mitigate their exposure and adopt sensible measures to address the issue.
Strategies include:
- Maintaining a positive and transparent relationship with the host state and adopting good internal and external corporate social responsibility practices.
- Partnering with local firms with good political links/ welcoming equity participation of the host state so as to build common interests.
- Making stabilisation, adaptation and foreign arbitration clauses part of any agreements with the host state.
- Taking advantage of bilateral and multilateral investment treaties.
- Obtaining insurance against political and other risks associated with resource nationalism.
When a state changes its laws and such changes impact negatively on a foreign investor’s business, there are options open to that investor to pursue. Provided the investment has been structured to take “As long as the current geo-political and economic conditions prevail, states will have the upper hand and the shadow of resource nationalism will hover over the commodities market. In order to deal with this risk, businesses need to consider how best to manage and mitigate their exposure” advantage of a Bilateral Investment Treaty, the investor may consider bringing a claim.
Looking to the future
Increasingly the phenomenon is not limited to emerging economies and a growing number of countries, including Australia and the UK, are implementing or evaluating policies designed to ensure their home state retains the maximum benefit possible from its natural resources.
Ultimately the phenomenon is not going away and therefore organisations must continue to implement appropriate risk management and engage with local governments to promote better understanding of the value projects bring to the host state and the people who live there.
By: John Whittaker & Michael Swangard, Clyde & Co, UK.
About Authors
.jpg) |
| John Whittaker |
John Whittaker : John has extensive experience of acting for some of the world’s largest trading companies and also governments. His primary focus is on international arbitration, litigation disputes arising in commodity trades and public international law.
John has handled disputes before many international arbitral bodies including the LCIA, ICC, SIAC trade bodies and foreign tribunals and before the Commercial Court in London. This includes a number of significant cases in the countries of the former Yugoslavia, Russia and the Far East. (John Whittaker, Partner, London, E: john.whittaker@clydeco.com)
.jpg) |
| Michael Swangard |
Michael Swangard : Mike specializes in international dispute resolution governed by arbitration bodies including: LME, ICSID, UNCITRAL, LCIA and ICC, as well as trade association tribunals such as GAFTA, FOSFA, CTF, SAL and RSA. He also advises clients on disputes before the English High Court and in the context of private mediations.
Mike is “lauded for his “fresh, no-nonsense approach to legal issues.” Chambers UK (Michael Swangard, Partner , E: michael.swangard@clydeco.com)
About Clyde & Co
Clyde & Co is a global law firm with a pioneering heritage and a resolute focus on its core sectors of aviation, energy, infrastructure, insurance, marine, and trade. With over 1,400 lawyers operating from 35 offices and associated offices in six continents, the firm advises corporates, financial institutions, private individuals, and governments. The firm has a reputation for its work in emerging markets, being the largest international firm in the Middle East and with a rapidly expanding network across Asia, Latin America and Africa.
Views and opinions / conclusion expressed herein are personal views of the authors and not that of COALspot.com.
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Thursday, 06 February 14
THE WORLD LARGEST COAL EXPORTER SHIPPED AROUND 35.90 MMT OF COAL IN DECEMBER 2013
COALspot.com: Indonesia, the world 4th largest coal producer and the Global largest multi grade coal exporter shipped around $2* billion worth ...
Thursday, 06 February 14
PANAMAX: FAR EAST IS ALMOST ABSENT AND ATLANTIC ON SLOW STEAM
Handy
Due to ongoing Chinese New Year the market is still quiet. Slowly we can see some fresh coal cargos entering the market with second half Feb/ ...
Wednesday, 05 February 14
DRY BULK MARKET HAS LOST FURTHER GROUND THIS PAST WEEK - INTERMODAL
COALspot.com: The Dry Bulk market has lost further ground this past week as activity ex-Far East disappeared into the Chinese holidays and owners id ...
Wednesday, 05 February 14
MARKET INSIGHT - TASOS PAPADOPOULOS
KNOWLEDGE TO ELEVATE
COALspot.com: Let's take a break from market prospects, numbers, order book etc. and shed some light on the conclusions of ...
Tuesday, 04 February 14
NEWCASTLE PORT'S WEEKLY COAL EXPORTS HIT NEW HIGH OF 3.53 MMT
COALspot.com: In the week ended 3 February 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled ...
|
|
|
Showing 3866 to 3870 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- IHS Mccloskey Coal Group - USA
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- Economic Council, Georgia
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Tata Chemicals Ltd - India
- Siam City Cement - Thailand
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- The University of Queensland
- TNB Fuel Sdn Bhd - Malaysia
- Mintek Dendrill Indonesia
- PowerSource Philippines DevCo
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Mjunction Services Limited - India
- Goldman Sachs - Singapore
- Essar Steel Hazira Ltd - India
- Madhucon Powers Ltd - India
- Planning Commission, India
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wilmar Investment Holdings
- Parliament of New Zealand
- White Energy Company Limited
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Altura Mining Limited, Indonesia
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- Star Paper Mills Limited - India
- Semirara Mining Corp, Philippines
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- Miang Besar Coal Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Makarim & Taira - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Commonwealth Bank - Australia
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sakthi Sugars Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- Asmin Koalindo Tuhup - Indonesia
- Indogreen Group - Indonesia
- Global Coal Blending Company Limited - Australia
- Simpson Spence & Young - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Grasim Industreis Ltd - India
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- Sojitz Corporation - Japan
- Ministry of Mines - Canada
- ASAPP Information Group - India
- Kohat Cement Company Ltd. - Pakistan
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Baramulti Group, Indonesia
- Australian Commodity Traders Exchange
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Australian Coal Association
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Bhoruka Overseas - Indonesia
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
|
| |
| |
|
