Resource Nationalism in Critical Minerals

Resource nationalism, the assertion of greater state control over natural resources to capture a larger share of economic value, is reshaping the global critical minerals landscape. Mineral-rich nations in Africa, Latin America, and Southeast Asia are no longer content to serve as raw material exporters while the lucrative processing, manufacturing, and technology stages of the value chain occur elsewhere. Instead, governments are deploying a widening arsenal of policy tools, including export bans on unprocessed ores, mandatory domestic processing requirements, increased royalty rates, renegotiation of mining contracts, and outright nationalization of mineral assets, to assert sovereignty over their geological endowments.

This trend is driven by several converging forces. The energy transition has dramatically increased the strategic value of minerals such as lithium, cobalt, nickel, and rare earths, giving producing nations greater leverage over consuming nations that urgently need these materials. Historical grievances about the "resource curse," where mineral wealth enriches foreign companies and local elites while broader populations see little benefit, have fueled political demands for change. And the success of early movers, particularly Indonesia's nickel strategy, has provided a template that other nations are eager to replicate.

Indonesia: The Nickel Model

Indonesia's decision to ban raw nickel ore exports in January 2020 stands as the most consequential act of resource nationalism in the critical minerals space in recent decades. Indonesia holds the world's largest nickel reserves and had long been a major exporter of unprocessed laterite ore, primarily to China. By banning ore exports and requiring all nickel to be smelted domestically, President Joko Widodo's government forced downstream investment into Indonesia. The strategy attracted over $30 billion in investment in nickel smelting and battery material production, predominantly from Chinese companies including Tsingshan, Huayou Cobalt, and GEM Co.

By 2024, Indonesia had become the world's dominant source of nickel products, producing over half of global nickel output. The country rapidly scaled up production of nickel pig iron, ferronickel, nickel matte, and mixed hydroxide precipitate (MHP) for the battery supply chain. The economic gains have been substantial: increased employment, technology transfer, and higher government revenues from processing activities. However, the environmental costs have drawn sharp criticism, including deforestation of tropical rainforest, contamination of coastal waters from tailings disposal, and heavy reliance on coal-fired power for energy-intensive smelting operations.

Indonesia has signaled its intent to extend the ore export ban model to bauxite (implemented in June 2023), copper, and tin. The government has framed this as an "Indonesia Inc." strategy designed to move the nation up the value chain and avoid the fate of resource-dependent economies that export raw materials cheaply and import expensive finished goods. The export ban was challenged at the WTO by the European Union, but the dysfunctional state of the WTO appellate system has left the ruling effectively unenforceable.

Democratic Republic of Congo: Cobalt and Copper

The DRC produces over 70% of the world's mined cobalt and is a major copper producer, yet the country remains one of the poorest on Earth. This stark disparity between mineral wealth and economic development has driven successive Congolese governments to demand more from the mining sector. In 2018, the DRC enacted a revised Mining Code that reclassified cobalt as a "strategic substance," subjecting it to a 10% royalty rate (up from 2%) and giving the state the right to increase its stake in mining projects without payment.

The government has also pursued direct interventions. In 2022, President Felix Tshisekedi ordered a review of all mining contracts signed during the tenure of his predecessor, Joseph Kabila, alleging that many were disadvantageous to the Congolese state. The state-owned mining company Gecamines has sought to renegotiate joint venture agreements with Chinese and Western mining companies, demanding larger equity stakes and higher payments. The DRC has periodically suspended cobalt and copper exports from specific producers, citing unpaid taxes, regulatory violations, or contractual disputes.

These actions create a challenging operating environment for mining companies. While the DRC's mineral endowment is unparalleled for cobalt and high-grade copper, the regulatory uncertainty, governance challenges, and risk of contract renegotiation have prompted some investors to look to alternative jurisdictions. At the same time, the DRC's leverage is limited by the reality that Chinese companies own or control most of the major cobalt mining operations in the country, and Beijing's diplomatic and financial influence in Kinshasa gives China considerable ability to protect its investments.

Chile: Lithium Nationalization

Chile holds the world's largest lithium reserves, concentrated in the Salar de Atacama in the arid north. In April 2023, President Gabriel Boric announced a National Lithium Strategy that would create a state-owned lithium company and require that future lithium projects operate through public-private partnerships in which the state holds a majority stake. The announcement marked a dramatic shift from the market-oriented model that had governed Chilean mining for decades.

Existing contracts with SQM (Sociedad Quimica y Minera) and Albemarle, the two companies that currently produce lithium in Chile, were not immediately affected. SQM's concession expires in 2030, and the government signaled that new terms would apply upon renewal. In December 2023, Chile's state mining company Codelco announced a partnership with SQM to jointly operate the Atacama lithium operations, with Codelco holding majority control. The deal was seen as a pragmatic compromise, preserving private sector expertise while asserting state ownership.

Chile's lithium nationalization reflects a broader political consensus in the country that strategic minerals should generate greater social returns. The policy has implications for global lithium supply: if state involvement slows investment or expansion, the world's largest lithium reserve base could underperform its potential, tightening supply for the battery industry at a time of surging demand.

Zimbabwe, Namibia, and the African Trend

Zimbabwe banned the export of raw lithium ore in December 2022, requiring all lithium to be processed domestically before export. The country holds significant lithium deposits, including the Bikita and Arcadia mines, and the government views domestic processing as essential to capturing value from the energy transition. Chinese companies, particularly Sinomine Resource Group and Zhejiang Huayou Cobalt, have invested in lithium processing operations in Zimbabwe to comply with the new rules.

Namibia introduced a ban on unprocessed lithium ore exports in June 2023, followed by Tanzania's consideration of similar measures. These actions reflect a growing pan-African movement to reject the historical pattern of raw material extraction that enriches foreign companies while African nations remain at the bottom of the value chain. The African Union's African Mining Vision, adopted in 2009, articulated this aspiration, and the current wave of resource nationalism represents its practical implementation.

Implications for Global Supply Chains

Resource nationalism creates both risks and opportunities for global critical mineral supply chains. The risks include regulatory uncertainty, reduced investor confidence, potential supply disruptions during policy transitions, and higher costs as governments extract greater rents from mining operations. For importing nations such as the United States, the EU, Japan, and South Korea, resource nationalism in supplier countries complicates efforts to diversify supply away from China, as alternative sources impose their own conditions and constraints.

The opportunities lie in the potential for more equitable and sustainable mining practices. When producing nations capture a greater share of value, they have stronger incentives to invest in environmental protection, community development, and governance improvements. Partnership models that balance the interests of producing and consuming nations, offering technology transfer, infrastructure investment, and fair revenue sharing in exchange for reliable supply, may prove more durable than the extractive arrangements of the past.

For companies and investors, navigating resource nationalism requires a deep understanding of the political economy of mineral-rich countries, the ability to structure deals that align with government objectives, and the flexibility to adapt as policies evolve. The era of low-cost, low-regulation mineral extraction is giving way to a more complex landscape where social license, government relations, and value-sharing are as important as geological quality and operational efficiency.