The new mercantilism of resource nationalism

From the high deserts of Chile to the nickel-rich islands of Indonesia and the lithium hills of Zimbabwe, developing nations are no longer content to be mere pits and pipes for the industrial world. Instead, they are leveraging soaring demand for critical minerals to rewrite investment rules and assert sovereign control over their geological endowments.

Resource and commodity nationalism is a deeply rooted historical and economic phenomenon. It spiked dramatically in the 1960s and 1970s as newly independent nations asserted sovereign control over their raw materials. Such nationalism occurs in waves previously driven by high commodity prices and anti-colonial movements. In the latter case, developing nations sought to rectify historical grievances by seizing control of their resource extracting and energy sectors from Western multinationals.

In 2025 and 2026, a similar fundamental, albeit less conspicuous, realignment has been taking place beneath the surface of the global economy. The era of free-flowing raw materials extracted under favorable terms for Western and Chinese multinationals is being systematically replaced by new forms of resource nationalism.

Mandatory domestic processing requirements, higher taxes and some outright state takeovers…represent the most significant shift in global resource governance for several decades.

 

This wave – mainly characterized by mandatory domestic processing requirements, higher taxes and some outright state takeovers – represents the most significant shift in global resource governance for several decades. In response, advanced industrial powerhouses like the European Union and China are retaliating through legal battles at the World Trade Organization (WTO) and alternative sourcing pacts.

Meanwhile the United States, as both a major commodities supplier and consumer, is not only aggressively employing the latter strategy, but also asserting or threatening military action against major resource states and territories, including Venezuela, Iran and Greenland.

Global Majority flex their resource muscles

Africa

The most prevalent instrument has been fiscal tightening in the form of higher royalties and income taxes in Africa. Nations like the Democratic Republic of the Congo (DRC), which controls more than 70 percent of global cobalt production, have instituted “super-profit” taxes, while Zambia has repeatedly raised its mining levies.

Zimbabwe has rapidly followed suit, banning exports of raw lithium – a mineral critical for electric vehicle (EV) batteries – in a bid to end the export of wealth in unprocessed form. By February 2026, the government in Harare had mandated that all lithium concentrates be processed domestically, pushing Chinese investors like Huayou Cobalt and Sinomine to commit hundreds of millions of dollars to local processing plants.

Across the continent more broadly, governments have increasingly embraced resource-nationalist measures. Tanzania introduced reforms during the presidency of John Magufuli that substantially increased state authority over mining operations, renegotiated contracts and expanded government revenue claims.

Zambia has periodically debated stronger state participation in copper mining, while Guinea has pursued policies encouraging domestic processing of bauxite before export. These initiatives share a common objective: capturing more economic value from natural resources rather than remaining suppliers of unprocessed commodities.

Latin America

A parallel resurgence of resource nationalism is taking place in South and Central America. Bolivia has long maintained one of the world’s most state-centric approaches to lithium development. Successive governments have insisted on substantial state control over lithium resources in the Salar de Uyuni, the world’s largest salt flat, to prevent foreign dominance of the sector.

In Peru, recurring debates regarding mining taxation, royalties and community benefits are ongoing, reflecting broader tensions over the distribution of resource wealth. Argentina, while generally more open to foreign investment, has nonetheless explored mechanisms to increase domestic participation in critical mineral value chains.

Chile’s approach is more nuanced but equally assertive. Although the inauguration of President Jose Antonio Kast in March 2026 introduced a more market-friendly tone, the underlying structure remains one of state dominance. Under the National Lithium Strategy finalized in late 2025, Codelco, Chile’s state-owned mining company and the world’s largest copper miner, assumed a 51 percent controlling stake in the Nova Andino Litio joint venture with SQM, a Chilean private-sector resources company. The entity will mine and process lithium, effectively nationalizing the strategic asset through a public-private partnership that skews heavily in favor of the state from 2031 onward.

At the extreme end of this spectrum lies state takeover and nationalization. Mexico declared lithium a “patrimony of the nation” in 2022, canceling private concessions and reserving exploitation exclusively for the state via the newly created LitioMX. This move effectively expropriated holdings previously owned by Chinese firms like Ganfeng Lithium, leading to international arbitration claims.

Asia

The disruptive innovation of mandatory domestic processing requirements is underway in Asia as well, embodied in Indonesia. The world’s largest nickel producer, Jakarta implemented a comprehensive ban on raw nickel ore exports starting in 2020.

This “downstreaming” policy (known locally as hilirisasi) has forced mining giants to build smelters and battery plants locally to gain access to the ore. The strategy proved wildly successful in altering trade flows, transforming Indonesia into a global hub for stainless steel and EV battery components almost overnight.

The motivations driving this wave of resource nationalism run deeper than simple greed. These policies are explicitly designed to capture the “value-added” premium that has historically accrued to manufacturing nations like China. By banning raw ore exports, resource-rich countries aim to force the relocation of smelting and refining – the stages where the most significant economic margin is generated – onto their own soil.

Industrialized-world retaliatory strikes

The supply-side shocks have reverberated with swift and vigorous retaliation from the industrialized nations that depend on these raw materials. The primary battleground has been the WTO. The EU, facing a shortage of nickel for its auto industry, filed a dispute against Indonesia’s export ban. The WTO dispute settlement body ruled in the EU’s favor, finding that the ban violated Article XI of the General Agreement on Tariffs and Trade 1994, which prohibits quantitative restrictions on exports.

In principle, this was a victory for free trade. However, Indonesia has largely ignored the ruling, opting to pay political and diplomatic costs rather than back down, signaling a potential crisis in the enforceability of WTO rules when dealing with industrial policy.

For investors operating in this volatile landscape, the legal and operational risks have skyrocketed. The concept of the “obsolescing bargain” – where investors make sunk costs only to have the state change the terms later – has returned with a vengeance. The upshot is that foreign companies face “indirect expropriation” claims, where export bans or quota systems strip the economic value of a concession without physically seizing the asset.

A prime example is that of DRC’s shift in late 2025 from a total cobalt ban to a strict quota system, which created immediate force majeure events for traders like Glencore, while competitors like CMOC were forced to renegotiate.

In Mexico, the cancellation of 1,200 concessions in 2026 – ostensibly for non-payment of duties – has heightened fears that regulatory enforcement is being used as a tool for de facto nationalization, especially for properties involving water or protected lands. International arbitration is the last resort, and Chinese firms including Ganfeng Lithium have begun litigating against Mexico. Yet even favorable rulings are often difficult to enforce against determined sovereign governments.

Beyond litigation, consuming nations are busily constructing parallel supply chains − a process known as “friend-shoring” or “de-risking.” The U.S. launched “Project Vault” in February 2026. It establishes a strategic minerals reserve designed to buffer against supply shocks, alongside a diplomatic blitz involving 54 countries to establish a preferential trade zone with adjustable tariffs to maintain a price floor for critical minerals.

The EU’s Critical Raw Materials Act similarly aims to reduce dependency on single suppliers, albeit primarily China, by mandating that a significant percentage of rare earths and lithium be refined within the bloc or by trusted partners.

China, ironically the world’s dominant processor of these minerals, has also retaliated against the resource nationalism of other states. Beijing has used its own resource mechanisms – export controls on rare earths and processing technologies – to create a reciprocal chokehold. A framework enacted in October 2025 gave China extraterritorial control over materials containing as little as 0.1 percent Chinese-origin content, a direct mirror of U.S. sanctions tactics. Beijing suspended this a month later, as part of an effort with the U.S. to deescalate. Nevertheless, the measures are likely to be restored as of November 2026.

The picture that emerges is not one of chaos, but of a structural transformation. The “Washington Consensus” of free trade and hands-off extraction is dead. In its place, a new mercantilism has arisen. The Global Majority have learned that in a net-zero economy, minerals like lithium, nickel and cobalt are the new oil – but unlike oil, which is burned, these metals retain their value through processing.

As the Chilean state takes control of the country’s leading lithium producer, and Indonesia builds a nickel cartel, the lesson for importing nations is stark: Supply security will no longer come from the open market, but from strategic, often conflictual negotiation with sovereign owners.

The winners in the next decade will not simply be those who own the mines, nor those who own the processing factories, but those who successfully manage the geopolitical friction between the two. The dual scramble for resource control and net-zero transition has truly begun.