Locations
As the global demand for renewable energy accelerates, so does the need for critical minerals and metals like lithium, cobalt, and rare earth elements — key enablers of technologies such as wind turbines, solar panels, and electric vehicles.
Many of these vital resources are concentrated in emerging markets across Africa, Asia, and South America. Recognising the strategic value of their natural resources, governments in these regions are reassessing and renegotiating their agreements with foreign mining companies and amending their legal frameworks to align with national interests and sustainable development goals
A shift in bargaining power
Host states are increasingly leveraging their bargaining power to secure terms that better reflect the current and future value of their resources. This trend manifests in higher royalty rates, stricter environmental regulations, and enhanced local content requirements, ensuring the benefits of resource extraction are shared more equitably with local communities. Governments are also prioritising sustainable development and addressing social and environmental concerns tied to mining operations. By renegotiating agreements, they aim to implement stricter environmental safeguards, promote sustainable practices, and ensure that local communities benefit from the projects.
For example:
- Chile has renegotiated lithium mining contracts to enhance state control and benefit local communities.[1]
- Panama courts declared unconstitutional a contract with First Quantum Minerals to operate the Cobre Panama mine.
- Democratic Republic of Congo increased royalties and improved labour conditions in cobalt mining agreements.[2]
- Mali introduced additional tax payments for foreign investors under revised taxation laws.[3]
- Zambia amended regulations to boost local ownership in mining projects.[4]
- Ghana revoked several mining leases to secure more favourable terms. [5]
Many of these actions have been controversial and led to disputes.
Regulatory and contractual changes
For investors facing changing regulations or being drawn into contract renegotiations, understanding the landscape is critical. Protections may be available through contractual provisions such as stabilisation clauses or under international investment treaties. These treaties safeguard investor rights through provisions like:
- Fair and equitable treatment: Ensuring just and reasonable treatment by host states.
- Protection from expropriation: Prohibiting the confiscation of investor property without prompt, adequate compensation.
Importantly, these treaties allow investors to pursue direct claims against states for breaches of such protections. While we understand that taking a government to international arbitration is a measure of last resort, investors should nevertheless understand their rights under such treaties before going into renegotiate their contracts. Those entering into new contracts can seek to better structure their investments to take advantage of the best available protections.
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At Fieldfisher, our team of legal experts specialises in guiding clients through these complex challenges and can deliver solutions that help you to navigate the evolving landscape of international resource investment confidently.
Whether you're renegotiating contracts, adapting to regulatory changes, or structuring new investments, we provide tailored advice to protect your interests. Even if risks seem low at first glance, early awareness and strategic planning can mitigate potential issues before they arise.
Please contact our international team for further insight: Ania Farren and Pedro Claros.
[2] According to Bloomberg, as part of the deal, Gécamines will receive a 1.2% royalty on Sicomines’ proceeds and the right to market 32% of its production. In addition, the 2024 renegotiated agreement updated the financing to focus primarily on the construction of national roads. This is key not only for the mining sector to function, but also for the well-being of the Congolese people, as the DRC has fewer all-weather paved roads than any other country of its size in Africa (for comparison, Saudi Arabia, whose land area is roughly the same size but is inhabited by less than half the DRC’s population, has twenty times more paved roads). The agreement also secured the DRC a 40% stake in the Busanga hydropower plant, a joint project between the two countries that was built by Chinese companies.
[3] In 2023, Mali adopted a new mining code that increases the state's shareholding in mines from 20% to 30% and introduces a 5% shareholding for local investors. The code also includes new local ownership requirements for mining companies. Foreign subcontractors, suppliers, and services providers must have 35% Malian ownership. In November 2024, the Australian goldmining company Resolute Mining agreed to pay $160 million to the government of Mali to settle a tax dispute. The company's CEO, Terence Holohan, and two other employees were detained in Bamako, Mali's capital, after a meeting with government officials. The three were released and departed the country after agreeing to the payment.