Wish you were mine: Resource nationalism in Africa

Economist: Wish you were mine: Resource nationalism in Africa

African governments are seeking higher rents and bigger ownership stakes from foreign miners.

THE true extent of Africa's vast wealth of resources is hard to guess. Geologists have picked over most of the rest of the globe in search of minerals, yet huge swathes of Africa remain largely unprobed. But the immense ore deposits so far discovered and soaring commodity prices on the back of rip-roaring Chinese demand have convinced the world's miners that the continent is the next big frontier. Bumper profits have also spurred mineral-rich countries to seek a bigger share of the spoils.

The list of African governments that have miners in their sights is a long one. South Africa, home to the greatest mineral wealth in the world, estimated to be worth $2.5 trillion, is considering imposing a swingeing 50% windfall tax on mining "super profits" and a 50% capital-gains tax on the sale of prospecting rights. Those are among the proposals put forward by an independent panel of experts, set up by the ruling African National Congress (ANC) to study the possibility of greater state intervention in the mining sector. …

I just finished reading Paul Collier's The Plundered Planet, which spends chapters unraveling issues involving the natural resource trap many emerging nations find themselves in. There is a need for greater transparency in how mining contracts are negotiated. There need to be civic institutions that justly invest proceeds in the long-term development of the economy and society and ensure that funds are not squandered or appropriated by strongmen. Collier gives some good insights on navigating this minefield (if you'll pardon the pun); it is well worth the read.