If you look at the history of the hydrocarbon industry during the 20th century, you saw the exact same trend over and over in countries without a history of private ownership of mineral resources. Exploration contracts were granted to foreign operators on favorable terms, and as the concessions were proved up (and petroleum gained geopolitical significance), those terms were slowly made less favorable to the operators, or the foreign operators were forced into local joint ventures, or their holdings were simply expropriated (or some combination of the above).
It looks to me like Chile thinks they have leverage and are beginning to turn the screws. If their reserves are sufficiently vast and economic, this might not appreciably affect the overall trajectory of the Chilean lithium industry for decades, if ever.
In other words, would an economist be able to point out any benefits?
Another gain is more control over the investments the company makes. The profits can be reinvested in the country instead of in the neighboring country that just slashed their corporate tax.
Another gain is reduced foreign influence over a critical portion of the nations economy.
Of course there are also drawbacks. Reduced access to international knowhow and capital etc. It's a trade off.
Typically, it means the local warlord and his family get to pocket it.
The Norwegian one was a gov corporation from the beginning though and was there from the beginning of exploration/development.
There can also be a long-term benefit that post-nationalized orgs from their past state as private structures, living off the fat as they say. The existing talent/prior knowledge/industry relationships are still there, just with a new owner and more capital. Similar to NASA absorbing a well established and already highly productive private industry / university researcher pool, and merging them under one umbrella and then having a golden era of productivity before sliding back into a more normal public agency.
That sort of productivity naturally fades over time as the gov bureaucracy increasingly takes over and the natural constraints of politicized funding.
It helps if your business is a slow changing monopoly industry like oil/gas though.
I'm not saying a state entity would be inherently better (though a case could be made for the benefits of long-term thinking that are more built-in) but I'd like to see the evidence that corporate businesses are inherently better themselves.
If we don't count "missing the boat" (as happened regarding search/mobile/social media), which arguably happens because of disruption from the newcomers and not mismanagement/underperformance at the oldtimers, what large companies have failed in the last 20 years?
Core to this point is that mega companies are only at threat from disruption, and it doesn't matter whether they're private or state owned for that
(I am of course ignoring companies that go under from criminal, as in corruption, mismanagement. I guess those are much more prevalent between the state-owned, for obvious reasons)
There's a shortage of key mineral reserves, but an abundance of corporate entities.
The entire company will go up or down according to output, even if due to external circumstances. Capital gets reallocated to better performing companies.
Examples: IBM, HP, Dell went from dominating to the doghouse; Microsoft made excellent strategic choices and remained relevant; Apple went from the doghouse to dominating, and so on.
This filters down to the employees. There is much more turnover and harder work (and higher pay) in private companies than at the government.
Extraordinarily claims require extraordinary evidence, of which none is provided. Public actors do not have, among many other negative characteristics, enshittification incentives. Greed is a malignant cancer that ruins human lives if left untreated.
But bureaucrats are greedy for power.
The point is for the country to take the role of "business owner", and to relegate the private businesses to the role of an "employee" (with a commensurately smaller slice of the upside) ... and if they don't like it, someone else will take their place ... after all the country has a guaranteed monopoly (they own the entire resource).
That sounds... racist.
https://psmag.com/.amp/environment/iraqi-vikings-farouk-al-k...
> Norway’s anti–resource curse is often attributed to exceptionalism: Viking genes or the like. But one secret of its success—maybe the secret—is not Norwegian at all, but a twinkly 77-year-old Iraqi-born oil geologist named Farouk al Kasim.
I'm asking about the Chile situation, not a 100% nationalized situation.
Raising the royalties on the reserves, on the other hand, is something that could have actually worked.
Sure, don’t nationalize your semi-conductor industry, but we’re talking about primitive mineral extraction for a very abundant and very in-demand commodity, and without the need for much exploration.
You know mining is like printing money but just darker and dustier, right? And I very much mean printing money. See: Dutch disease. A lack of a regulated economy and a free-for—all of resource extraction can lead to massive hangovers.
This is more in the ballpark of the machinations of the Federal Reserve than anything else.
The problems with Venezuela are not the problems with Norway. Norwegians are rich and can afford the time and energy to work within the practicalities of a mixed economy. Venezuelans are poor and seem more swayed by hope on big bets. It takes ample patience to throw out ideology and tease things apart for what they actually are. I don’t fault people in substandard conditions for being swayed by ideology, but for the rest of us can we be a bit more pragmatic?
So likely what will happen is that China will do it and pay below market rate for the lithium.
I would not be surprised if the entire Boric fiasco is just Chinese infiltration.
Having a stable Chile as a source of resources to stack against other sources of resources may be worth the markup.
[1] https://www.ft.com/content/99680a04-92a0-11de-b63b-00144feab...
Saudi Arabia on the other hand is fabulously corrupt but they were still able to take over their oil industry (Aramco) without problems and even go upmarket in petrochemicals with SABIC.
https://psmag.com/environment/iraqi-vikings-farouk-al-kasim-...
Of course Norway has strong democratic institutions Iraq didn’t, but so did the Netherlands.
But in the real world, once you nationalize a company, it's a matter of time before it becomes a magnet for corrupt politicians.
The only world in which I would be OK with nationalization is where politician had shock collars connected to a nepotism/corruption detection AI. And where even false positives of such AI were OK.
Rich people love pillaging and raping resource laden countries in the global south, assuming history is any indicator.
Edited for spelling
Latin isn't native language anywhere except Latium. English isn't native language anywhere except England (even excluding places like Cornwall that used to speak Celtic languages until the modern era). Arabic isn't native language anywhere except the Arabian peninsula. Heck, Quechua isn't native language anywhere but a very small region around Cuzco and was deliberately introduced by the Incas to make management of their huge, multiethnic empire easier.
I don't think that ancient imperial language policies in itself are particularly shameful. Possibly the opposite. You can pillage and rape people without even talking to them, but if you want to trade and develop deeper relations, mutual understanding is a must.
I mean, if you really want to play the game, the Angles (along with the Saxons) aren't native to England (i.e. Angle-land); they were a germanic tribe.
Of course, old english is a pretty far cry from the modern incarnation of the language.
Large claims require citation. Got any?
2005: The leaders of La Concertacion, Chile’s center-left ruling government coalition, want to eliminate the private profits of the private bus system [1]. They sell the new system as a way to make public safer and cleaner [2].
2007: A consensus builds, and Santiago (Chile's capital) nationalizes urban transport network. It is a customer service disaster. Commuters wait at stops for 2 hours[2] as they see multiple buses drive by [1]. The 3000 bus companies get cut to 10, one of which (the public company) becomes the target of the largest class-action lawsuit in Chile, with thousands of commuters suing the new entity [2]. It is also a financial bomb, as the system goes from $60M in profits, to > $600M in losses[1], overnight, with 290M bailout after only 9 months [2]
2019: The "Estallido Social" (Social explosion) riots start, centered in santiago. The reason * Rise in public transport fares in Santiago * [3]
2021: A student leader and prominent figure in the 2019 riots [4], with a coalition of leftist groups and the communist youth of chile [4], is elected president. A new left government is now in power
[1] https://scholars.duke.edu/display/pub1127207
[2] https://www.npr.org/2007/10/08/15100976/in-chile-commuters-s...
[3] https://en.wikipedia.org/wiki/2019%E2%80%932021_Chilean_prot...
[4] https://en.wikipedia.org/wiki/Gabriel_Boric#Role_in_the_Esta...
the govt tried to please the existing company owners and they of course undermined everything and came out better than before. (the "private" transportation business on south America runs 100% on subsidies, even though it's expensive for the users)
this is not an example against state ownership of a service cost center. but simply data that it can't be done by a centrist govt.
NPR, duke.edu, and Wikipedia!? Those are left, lefter than left, and center-left.
It's a suppliers market and Chile has decided to "eminent domain" their resources and remove private ownership from the game, as is their right.
Yesterday would have been the best time to do this, and now is the next best time. At some point battery chemistries will shift to Na or solid state will take the crown, but until then...
Biggest one in that region is Argentina, and the US has been sanctioning them a lot lately, to the point where their country reached 3 digit increased inflation, 3 digits!
So I suspect this is all done on purpose to further lower the price of lithium (corroborated with the lithium price in the global market, fishy fishy) so the US can have their green transition at lower cost, it's a sad era for South Americas yet again..
This nationalization is a step in the right direction, but that doesn't matter if it ends up in the hands of foreign countries for cheap...
They should keep the lithium for themselves, manufacture batteries themselves and sell them with very high margins, if they don't do that, then something is fishy in the Chile/Argentina government..
Huh? Second largest producer with by far the largest reserves.
https://www.volkswagenag.com/en/news/stories/2020/03/lithium...
"opportunities"