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Australia to compete with resource nationalism

Australia to compete with resource nationalism article image
Attempts by resource-rich countries to increase revenue from mining and petroleum projects through increased tax and royalty rates and state ownership levels, also known as 'resource nationalism', will become a challenge for Australia's resources sector, according to Roger Donnelly, chief economist at government credit agency, the Export Finance and Insurance Corporation (EFIC). EFIC's recent World Risk Developments publication examines Mongolia, Guinea and Libya. Only in Mongolia have demands on miners eased and, as a result, Mongolia could be set to become a considerable supplier of copper, gold, coal and uranium to China. "Meanwhile governments in Guinea and Libya seem to be taking a gamble that, with commodity prices rallying again and still well above their pre-crisis long-term average, there is scope to gain some further revenue," said Donnelly. "In Tripoli, they are aware that push too far and you kill the goose that lays the golden eggs. In Guinea, an inexperienced military junta seems less conscious of this danger." Resource trade from three countries is growing rapidly, albeit from a low base. But countries like Australia need to take heed: "They are the world's new resource frontiers - countries that Australia's internationally competitive resource and engineering companies are gravitating towards to drive their own growth," Donnelly concluded.

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