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Sep 13, 2017

Developing countries punch back at mining giants

Once feared by governments, mining multinationals are now discovering that the growing hostility to neoliberalism has left them exposed.

Bernard Keane — Politics editor

Bernard Keane

Politics editor

In another sign that the age of neoliberal economics is ending, developing countries are going after mining giants, no longer in fear that they'll be punished by markets. In a remarkable contrast to eight years ago, when major mining companies helped drive an Australian Prime Minister from office amid cries of "sovereign risk", large mining companies are having to swallow their pride as governments of developing countries target them.

Bloomberg recently collected a number of examples where mining multinationals had to buckle to local governments, including US mining company Freeport, which was recently forced to sell a majority stake in its massive Papuan copper and gold mine to Indonesian investors. Significantly, the list includes another clash between Zambia and one of the world's worst tax dodgers, Glencore, which in 2011 was revealed to be rorting the Zambian tax system of more than US$100 million a year through transfer pricing. The Australian mining industry had repeatedly held up Zambia as a model for Australia in relation to taxation of mining companies. In August, the Glencore-owned Zambian subsidiary refused to pay higher electricity prices and threatened to fire nearly 5,000 workers, but recently caved in and agreed to pay more.

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3 comments

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3 thoughts on “Developing countries punch back at mining giants

  1. Phen

    As much as its an overused phrase, sovereign risk in developing countries is very real. Investment into South Africa has dried up because of the constant tinkering with mining rules and expropriation of material %s of their legally acquired project assets.

    1. Nudiefish

      Countries like South Africa have been used and abused by big mining companies too. Sovereign risk also means losing your own sovereignty to corporations.

  2. AR

    Look at what happens when countries try to maintain ownership/sovereignty over their assets.
    Mosaddegh springs to mind but he only pissed off the UK & the US.

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