According to recent press reports, the rally in commodities prices over the last year has led to a resurgence in so-called resource nationalism in Africa. Resource nationalism is a phenomenon whereby Governments seek to secure what they perceive to be a fair share of the revenues generated by the exploitation of its natural resources. This risk is particularly acute during sustained periods of high commodity prices as Governments observe foreign mining companies and commodities traders reaping the benefits of higher prices. Measures taken by the host state can include outright expropriations, renegotiations of existing concessions, the cancellation or non-renewal of key licences and the imposition of higher taxes or royalties on natural resources.

The Financial Times recently reported (14 June 2011) that the overall sentiment at a recent natural resources conference in Johnannesburg was that African countries were not profiting enough from the commodities boom, while international and mining companies were making windfalls. Activists, non-governmental organisations and government officials are said to be largely in agreement that better terms are required for the host nations.

In South Africa, there have been calls from the ANC Youth League for the nationalisation of the mining sector. Whilst we may be unlikely to see a wave of outright nationalisations, it seems that a growing number of African governments may seek to increase taxes or review the terms of existing mining concessions. In Guinea, the new government led by President Alpha Conde has announced that it is revisiting the country's mining code and will review existing mining contracts. Tanzania has stated that it intends to impose a windfall tax and Zambia and Namibia are also reported to have been considering tax changes.

It remains to be seen how this potential resurgence in resource nationalism in Africa will affect political risk insurers. In the meantime, insurers should continue to monitor developments in this area closely, both in terms of how they potentially impact upon existing policies and in assessing new risks. It could well be the case that new opportunities for insurers in this region are in reality driven by the insured's concern over the perceived increase in political risk as governments seek to cash in on high commodity prices.