Rising Resource Nationalism in Africa: How Can North American Mining Companies Address Supply Chain Risks?

Mozambique’s New Law: Another Bell Tolls for Resource Nationalism

In 2023, Mozambique’s parliament passed a new law requiring all mining projects to provide the state with at least a certain percentage of equity. This move is not an isolated event—from Chile’s nationalization of lithium to Indonesia’s ban on nickel ore exports, resource nationalism is redefining the rules of the game for cross-border mining investment worldwide.

For North American mining companies, Mozambique’s new law is not only an obstacle to accessing key African minerals (such as graphite, titanium, and coal) but also a signal: the business model of relying on overseas resource supply faces fundamental challenges.

Why Is This Happening? Resource Curse and Sovereign Awakening

Mozambique is rich in mineral resources, especially graphite—a key raw material for electric vehicle batteries. However, for a long time, resource revenues have not been effectively transformed into national development, with poverty and corruption coexisting. The core logic of the new law is: through state equity, ensure that mining profits benefit the domestic economy more fairly.

This logic resonates strongly across Global South countries. The “model” that North American mining companies have followed over the past few decades is: sign long-term agreements, obtain extraction rights, and have profits flow mainly to headquarters. Now, host governments are demanding more control and revenue sharing, which is essentially a correction to past unequal contracts.

Who Will Benefit? Who Will Face Pressure?

• Beneficiaries:
• The Mozambican government: directly gains equity returns and bargaining power.
• Canadian and U.S. domestic mining companies: those already operating in North America or friendly countries (e.g., Mexico, Chile) will gain a relative competitive advantage due to rising supply risk in Africa.
• Alternative supply countries: such as Canada (rich in graphite), the United States (lithium in Nevada), and Mexico (copper). Projects in these regions may attract more investment.

• Those Under Pressure:
• North American companies with major projects in Mozambique: such as the Australian company involved in the Montepuez graphite mine (but North American enterprises face similar risks).
• North American downstream manufacturers dependent on African minerals: companies in batteries, aerospace, defense, and other sectors may face rising raw material costs and supply disruptions.
• Small exploration companies: lacking bargaining power and risk diversification, they are more vulnerable to policy changes.

What Does This Mean for North American Supply Chains? Accelerating Localization of Critical Minerals

North America has long been trying to reduce its dependence on China for critical minerals such as rare earths and graphite. Mozambique’s new law, combined with the instability of cobalt mining in the Democratic Republic of Congo, further reinforces this urgency.

The U.S. Inflation Reduction Act (IRA) and Canada’s critical minerals strategy essentially promote domestic mine and processing facility construction through subsidies and tax incentives. However, the development cycle for mining projects typically takes 5–10 years. In the short term, North American companies may shift to countries with lower political risk, such as Canada, Mexico, Brazil, and Chile.In the long run, this "resource sovereignty movement" will force North American companies to reassess their global mining portfolios: investing in Africa requires more complex risk hedging (such as political risk insurance, joint venture design), while accelerating technological breakthroughs (such as battery recycling, alternative materials) to reduce dependence on specific sources.