Geopolitics is back with a vengeance. For decades globalisation thrived under the US defence umbrella, but with the return of Donald Trump to the White House, that phase of history might be coming to a rapid close with tectonic consequences for the mining industry.

In 1989 political scientist Francis Fukuyama declared “the end of history” as the cold war fizzled out with the collapse of the Soviet Union. He pronounced liberal democracy as the triumphant form of government. I’m wondering, rather ominously, if 14-16 February may have marked another “end of history” moment? 

New world order
During the Munich Security Conference held on that date the Europeans were rudely reminded of deep ideological divisions between them and the new US administration, such as over immigration. They were warned in stark terms to shoulder much more responsibility for their own defence and for Ukraine. By the way, Trump does not need the US to leave NATO to render it “brain dead” to resurrect an old quote by French President Emmanuel Macron. He only needs to stop supporting it. 

The fact is, the US has been pivoting towards Asia-Pacific, at least since Obama’s Presidency. Trump appears to be attempting this repositioning at warp speed and ending the war in Ukraine - at any cost to that country - to fully concentrate on the US’s real peer rival China. 

Indeed, it might be part of a Machiavellian play to splinter the China-Russia alliance to isolate and weaken the former. Trump thinks the two should never have been allowed to get together in the first place. This split might be doable by giving Russia the deal it wants over Ukraine, acknowledging its desired areas of influence and lifting sanctions against it. Besides, there's no love lost between Russia and China anyway. 

Meanwhile, Europe feeling abandoned by the US and having to spend more on defence anyway, may emerge as a serious geopolitical contender in its own right under the banner of the EU. It would be ironic for the US to make peace with a severely weakened Russia (costs of Ukraine war) only to replace it with an even more powerful geopolitical rival which was once a passive ally. 

The great carve-up
This has dark echoes of 19th century geopolitics as the then great powers carved the world up into spheres of influence. They could then plunder resources and monopolise markets at will across much of the developing world. 

In a similar spirit, Trump wants to annex Greenland and presumably Canada given his reference to it being a US 51st state. Both are resource rich and strategically important for the US. Trump has even made a play for US mineral rights in Ukraine and no doubt Russia would like to scoop its share of Ukraine's resources if it can.  

How much of this is rhetoric or actual policy from Trump? Who can tell right now? 

But if the 19th century playbook on geopolitics really is back in vogue - then it is going to have massive consequences for the mining industry, which is highly globalised. A fragmented global order does not bode well for the industry though it might amplify its geopolitical importance as part of a scramble for precious resources.

The mining industry disrupted
Some of the consequences of this new environment could see state-backed mining companies gain the upper hand in resource-rich countries. Access to resources could become weaponised and cartel-like alliances among producers could form intent on gauging high prices out of consumers. 

Another possibility is more superpower backed ‘proxy’ wars over resources. This could be devastating for many developing countries. I’ve heard estimates of 10 million to 20 million people being killed in proxy wars fought mostly in developing countries during the cold war at the behest of the West and the Soviet Union. 

It goes without saying that resource-based supply chains could become disrupted as different parts of the world side with one of the great powers. This is likely to see more vertical integration between mining operations and manufacturers turning metals into products. 

All this suggests a period of considerable price volatility with potential shortages of critical resources as the world tries to settle into a new equilibrium. 

The end of ESG?
This is potentially terrible news for ESG. It is already under pressure with more right-wing governments winning elections in the West. The costs of climate change policies are becoming openly challenged. Meanwhile, every week another multinational ditches its DEI policies, which it once paraded as a sign of progressivism.

It’s an environment where globally established norms such as the UN Principles for Responsible Investment could wither if resource-nationalism becomes the new priority. 

There’s no denying that if this bleak picture is the way it is going to be - then it will be a big setback for ESG. I suspect ESG programmes will be increasingly viewed through the lens of measurable financial returns rather than being good corporate citizens. Being totally frank, I don't think this is great news for my area either - host community relations. However, I would argue that there is much more to this activity than being a corporate ‘do Gooder’ or to tick some regulatory compliance boxes.

Being pragmatic
Whatever the new global order - There are very pragmatic reasons for a mining company to maintain good terms with host mining communities - even if the reputational risks of bad behaviour might become less than they used to be.

For one, strong community buy-in equates to smoother running mining operations. Community opposition can lead to expensive delays or even the shutting down of mining operations. And there have been cases of this in Latin America and Africa - even in jurisdictions with a poor governance record. All had very real costs that could be measured on an Excel spreadsheet.  

Other related benefits include less mineral theft and illegal mining, which costs the host government tax revenues and income for the mining company. 

Secondly, I believe that ordinary decent people everywhere will continue to deplore human rights violations and mining companies who ignore this risk being publicly ‘named and shamed’.

Thirdly, many governments would prefer to deal with socially responsible mining companies that won’t give them more headaches to deal with by alienating local communities. These are issues that can become political and quickly spin out of control for a mining company resulting in huge financial losses. 

If access to a highly strategic mineral hangs in the balance - host community relations could become even more important in some jurisdictions.

However, I really hope I’m wrong about the direction the world is moving in - that the rules-based global order is about to be shattered. On the other hand, I can’t ignore the daily stream of depressing headlines suggesting otherwise.