The recent carnage at Lonmin's (LMI) Marikana platinum mine serves to highlight how the spectre of resource nationalism is becoming an ever more significant risk factor for mining companies, not only in South Africa, but throughout many mineral-rich locales throughout Africa and beyond.
Ostensibly, the events at the Marikana mine, which left at least 44 people dead, were linked to a straightforward dispute over pay. But the breakaway Association of Mineworkers and Construction Union (AMCU) has been garnering grassroots support due to its more confrontational stance with mine owners. The AMCU has received overt support from hardliners, such as former ANC Youth chief Julius Malema, who are calling for South Africa's mines to be placed under indigenous control. Mr Malema, a somewhat divisive figure who has been expelled by the ANC, insists that this needn't necessitate outright nationalisation, and points to Botswana where state-owned entities have formed successful partnerships with private mining companies; the most high-profile being Debswana, a 50:50 joint venture between the government of Botswana and De Beers.
Grassroots support
It is not difficult to understand why calls for increased indigenisation elicit strong support from those in the townships who have grown disenchanted with the pace of change. Two decades on from the dismantling of apartheid and many South Africans have yet to experience an appreciable rise in their standard of living. The fact that Malema's populist stance attracts such genuine support at the grassroots level presents a real problem for the ANC, not to mention investors in Lonmin, Anglo American (AAL), Xstrata (XTA), et al.
The troubles at Marikana aside, it's not as if investors in the mining sector haven't had to contend with issues linked to resource nationalisation in the past, especially during periods of rising commodity prices. But the game has changed in recent years due to China's deepening footprint in Africa and elsewhere on the globe.
China the catalyst for change
It could be argued that the biggest threat to western mining interests resides in China's strategically co-ordinated approach to securing key commodity inputs; a process that has been accelerated due to the magnitude of state-sponsored lending and export credits provided by Beijing. Where is the incentive for developing economies to go into hock with the likes of Goldman Sachs or JPMorgan when the People's Republic is willing to provide capital at a fraction of the cost in exchange for access to mining licences or guaranteed long-term supply contracts?
And, unlike the World Bank, China doesn't insist upon wholesale privatisation of a debtor nation's public infrastructure if it is having trouble meeting its interest obligations. And outside of Tibet or Taiwan, China has little in the way of imperialist baggage - an obvious plus point in Africa.
Is the genie out the bottle?
Of course, the gathering tide of resource nationalisation is even more apparent within the global oil & gas sector, where at least two-thirds of global reserves are controlled by state-owned entities. Within the global mining sector state-control drops to around 28 per cent, but it remains on the rise, even with a negative outlook on bulk mining prices.
In the past, western miners have been able to minimise any disruptions brought about by the resource nationalism issue by pandering to narrow vested interests. But with the rise of state-sponsored alternatives to western capital - most notably that of China - it may be that investors will need to take a long-term strategic view of their holdings in miners operating in Africa and other developing economies where resource nationalism is on the rise.
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