Greetings from Houston!
Here’s the latest from Texas: ExxonMobil is ramping up its oil production plans, even though there’s growing concern about a potential supply glut in the market. The mega oil company announced that it aims to increase its output by nearly 20% by the end of the decade, boosting spending while some of its competitors are playing it safe.
By 2030, Exxon plans to produce 5.4 million barrels of oil equivalent each day, surpassing the output of most OPEC nations. The company argues that it can keep production costs low, positioning itself to meet what it expects to be a lasting global demand for fossil fuels, even if oil prices take a dip.
In other news, the Biden administration recently imposed new tariffs on key mineral imports from China. This move is seen as an effort to bolster the emerging clean technology manufacturing sector in the US as the president prepares to leave office.
Our newsletter today focuses on a concerning trend: as countries vie for critical minerals necessary for future economies, the risk of resource nationalism is rising. Our commodities expert, Camilla Hodgson, explores a recent report on the implications of this trend for global geopolitics. The conclusion? We’re entering a new phase of protectionism.
Thank you for reading! Feel free to reach out via email — Myles
The Rise in Resource Nationalism
Businesses globally are facing heightened risks due to a growing wave of protectionism, as nations scramble to secure essential minerals for battery production and energy transition, according to recent research.
Rising geopolitical tensions have led to state intervention and protectionist policies that have not been seen in decades, particularly in Western democracies. This shift is notable in Europe and North America, where governments are striving to secure their access to critical minerals like lithium and copper, which are largely controlled by China.
The situation has escalated recently, with critical minerals becoming a significant point of geopolitical conflict. For instance, China banned shipments of several essential minerals and metals to the US in retaliation for new exports controls imposed by the Biden administration.
As Jimena Blanco, chief analyst at Verisk Maplecroft, noted, “The changing geopolitical landscape and shocks such as the pandemic and the Ukraine conflict have accelerated policies to secure the minerals essential for powering industries and ensuring energy security.”
Research indicates that in the last five years, 72 countries out of 198 surveyed have encountered increased interventionist and protectionist tendencies. Not surprisingly, Venezuela, Russia, and Mexico are viewed as the highest-risk nations for businesses operating in these sectors.
Concerns have also risen in Germany, Spain, the UK, and Poland, where the risk scores in terms of state intervention have worsened significantly since 2019. For Germany, this is largely due to protective measures such as the seizure of Russian energy assets after the Ukraine invasion.
In summary, North American and European governments are taking steps to strengthen their domestic mining and energy sectors, alongside instituting restrictions on foreign investment by rival nations. This evolving scenario paints a complex picture for companies and investors dealing with critical mineral supply chains, which are often multinational in nature.
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