Resource disputes between investors and states hit 10-year high

A new report from law firm DLA Piper indicates that disputes between governments and investors over natural resources have reached a 10-year high, with 32 cases lodged with the World Bank arbitration body in 2025 already exceeding last year's total. This escalation is primarily fueled by resource nationalism and intensifying geopolitical competition, particularly between the U.S. and China, for critical minerals vital for emerging technologies like AI and electric vehicles, creating significant investment risks, especially in Latin America and Africa.

Analysis

Law firm DLA Piper reports that government-investor disputes over natural resources have reached a 10-year high, with 32 cases lodged with the World Bank arbitration body in 2025 already surpassing last year's total. This escalation is primarily driven by increasing resource nationalism and intensifying geopolitical competition between the U.S. and China for critical minerals essential for AI and electric vehicle technologies.

Geographically, Latin America accounts for 11 disputes, with Colombia leading with four cases following President Petro's policies on natural reserves and fracking bans, while Mexico's 2022 lithium nationalization also contributed to two cases. Africa recorded 10 disputes across nations like the DRC, Niger, and Tanzania, with the DRC's rich critical mineral reserves being a focal point, including a reported arbitration breach involving AVZ Minerals and KoBold Metals.

These rising tensions, with 17 cases specifically related to oil and gas assets, signal a significant increase in investment risk, particularly within emerging economies. The overall "strongly negative" sentiment and "cautious" tone reflect the heightened regulatory and geopolitical uncertainties facing resource-focused investments globally.

Key Decisions for Investors

• Investors should re-evaluate geopolitical and regulatory risks in resource-rich emerging markets, particularly Latin America and Africa, given the surge in government-investor disputes.
• Conduct enhanced due diligence on companies with significant asset exposure to countries exhibiting strong resource nationalism or where critical mineral competition is intense, such as those involved in lithium or cobalt extraction.
• Consider diversifying portfolios away from single-country resource plays or exploring hedging strategies against potential nationalization or policy shifts.
• Closely monitor international arbitration cases and local regulatory changes, as these can significantly impact asset valuations and operational viability for resource companies like AVZ Minerals.