IEEJ： May ©IEEJ 2024
Special Bulletin
A Japanese Perspective on the International Energy Landscape (689)

May 16, 2024

Repeated Rise of Resource Nationalism and the International Energy Situation
Ken Koyama, PhD
Chief Economist, Senior Managing Director
The Institute of Energy Economics, Japan
Energy issues can be viewed from various angles. Views of energy consumers or consuming
countries on energy issues naturally differ from those of energy resource-rich, producing, andexporting countries, reflecting their respective positions.
As energy issues have become more complex, not only energy resources but also resourcesrelated to energy issues are attracting global attention. As an important example, energy-relatedresources typically include lithium, cobalt, rare earths, and other critical minerals that will become
indispensable for the production of renewable energy, batteries, and electric vehicles, for which
demand will expand amid the energy transition towards decarbonization. Naturally, critical mineral
consuming and producing countries have different views and strategies on the critical mineral issue.
It is significant for countries that consume important commodities to ensure their stablesupply. The more the strategic value of these commodities increases, the more important it is to takevarious measures to obtain them in necessary and sufficient volume at affordable or reasonable prices.
Needless to say, the most important indicator of these commodities’ strategic value is prices. Whenthe prices of important commodities rise or are expected to rise, securing their stable supply emerges
as a major challenge.
For energy resource-rich, producing, and exporting countries, however, a top priority is tomaximize income from the development, production, and export of energy resources. When thestrategic value of these resources increases, they have a good chance to maximize their income. They
also try to maximize their national interests such as national development and the expansion ofinternational influence as resource-rich countries. An increase in the strategic value of these resources
provides a good opportunity for them to do so.
As interest in economic security issues grows amid the deepening division of the world,
securing strategic goods and technologies is viewed as more important than ever. Unlike the past
period where emphasis was placed on minimizing costs on a global basis based on free trade and theinternational division of labor, countries at present give priority to the domestic production of strategic
goods and technologies and the cooperative development of supply chains for these goods andtechnologies with allies and strategic partners, being prepared to bear additional costs. Criticalminerals represent goods that have become subject to these initiatives due to their growing strategic
value.
Under these circumstances, it is natural for resource rich countries to try to maximize theirnational interests through issues related to the development, production, and export of critical minerals.
Since 2020, when the trend towards carbon neutrality began to accelerate, in fact, resource nationalism
movements to strengthen control over domestic resources have emerged, including Chile’s
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announcement of a national lithium strategy in 2023 and Mexico’s creation of a state-run lithiumcompany in 2022 in Latin America, and Indonesia’s ban on nickel and other exports in Southeast Asia.
Regarding the enhancement of state control over resources, China, with a great presence in criticalmineral resources endowment and their supply, is attracting attention by strengthening domesticindustry and export control, especially for rare earths, which are of strategic importance.
This situation can be seen as the rise or beginning of a new resource nationalism regarding
critical minerals. The emergence of the new resource nationalism has come to be seen as a newimportant issue for critical mineral consuming countries to address in securing a stable supply of suchminerals.
Resource nationalism related to critical commodities has gained momentum many times inthe past, exerting influence on the international situation. The problems related to resource nationalism
regarded as the most serious issue in the international energy situation have been symbolicallymanifested for oil, which has been regarded as the most important strategic commodity for a long time.
The rise and heightening of resource nationalism regarding oil first attracted global attention
in the 1960s and 1970s, when the movement of resource nationalization came. Up until then, hugeinternational oil companies represented by the Seven Sisters had held the helm in the development ofoil resources. The movement was a major wave for resource-rich countries to break away frominternational oil companies’ control over resources and regain real control over oil development andthe power that arose from the development. During the offensive of the Organization of the Petroleum
Exporting Countries in the early 1970s, resource rich countries achieved capital participation in or
nationalization of domestic oil resources. The power of oil producing countries reached its peak amid
crude oil price spikes caused by the first oil crisis and the growing importance of oil as a strategiccommodity.
Resource nationalism regarding oil shook the world again on crude oil price spikes in theearly 2000s. In the 2000s, the oil market changed dramatically from the period of stagnation andstability in crude oil prices in the 1990s. As China began to explosively consume resources, the oilpeak theory emphasizing the limits of oil supply became controversial, leading to the view that the oil
supply-demand balance would tighten structurally over the long term. Then, resource-rich countries
tried to toughen their control over oil resources in reaction to their promotion of foreign capital
introduction amid low oil prices in the 1990s. Representing such efforts were Venezuela and Russia.
In Venezuela, the Hugo Chavez administration at the time tightened control over state-owned oilcompany PDVSA, unilaterally changed the conditions for foreign investment, and used resource
development as a diplomatic card. In Russia, the Vladimir Putin administration reversed the foreign
capital introduction policy promoted amid the economic turmoil and stagnation in the 1990s andenhanced state control on the oil and gas sector as symbolized by the Yukos incident, in which Yukos
Oil Company was broken up.
The rise and heightening of resource nationalism were behind both the oil crises in the 1970s
and crude oil price spikes in the early 2000s, forcing oil-consuming countries to strengthen their efforts
to ensure a stable oil supply as much as possible. Incidentally, the crude oil price spikes and the tighter
oil supply-demand balance that began in the 2000s led Japan to renew its emphasis on energy security
and formulate the Strategic Energy Plan. This fact is interesting for considering today's issues (see A
Japanese Perspective on the International Energy Landscape (686)).
There is a saying, "History repeats itself." Even if the exact same event is not reproduced
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again, it is often the case that common factors and highly similar events and results occur. With regard
to critical minerals, which are attracting attention as important commodities today, it is quite possiblethat events similar to those that occurred in the international oil market in the past and became
problems will occur in the future. The issue of critical minerals has become a real problem today andis expected to grow more serious in the future. This is because demand for important mineral resources
and their products is expected to increase dramatically as decarbonization initiatives are promoted. Inorder to prepare for future problems, energy-consuming countries need to learn from history andconsider, prepare, and implement response strategies.

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