Rio Tinto CEO calls for ‘United Nations of mining’ to combat resource nationalism
Rio Tinto CEO Jean-Sebastien Jacques said that big global miners will need to work together to combat a rising wave of resource nationalism in countries such as Mongolia, Democratic Republic of Congo, South Africa, and Australia, reported the Financial Times.
Speaking at the 35th Annual Global Mining Metals & Steel Conference hosted by the Bank of America Merrill Lynch, Jacques said the trend for governments to want a greater share of their mineral wealth was as prevalent in developed countries like Australia as it was in Africa.
"A significant industry issue is resource nationalism, from the Democratic Republic of Congo and South Africa, to Mongolia and Australia, it is gaining momentum," Jacques said.
"As a result, the case for investment and foreign direct investment is clearly under threat,” he added.
Big oil companies have traditionally worked together on big projects in order to reduce the risk attached to multi-billion dollar projects. Jacques said the mining industry should follow the oil sector's example.
Jacques added that cooperation had previously been the industry model, but the commodities super cycle of sustained high prices at the start of this century had made miners “greedy”.
“Partnerships were seen as value leakage, not as risk mitigation. There is no doubt in my mind that going forward we need to spread the risk and, in some very challenging jurisdictions, we will have to build the United Nations of the mining business, not only Rio, BHP, Anglo American so on and so forth, it is bringing the World Bank, the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA)," he said.
Rio has involved agencies such as the IFC and MIGA into what has been considered high-risk projects, including the Oyu Tolgoi copper mine. In 2015, IFC and MIGA, both member organizations of the World Bank Group, have arranged 2.2 billion USD in debt and guarantees for Oyu Tolgoi. In addition, as mentioned by Jacques, Oyu Tolgoi has the backing of 15 commercial banks as well as the European Bank for Reconstruction and Development.