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France fuses earth, gold and state in quest for mineral riches

France fuses earth, gold and state in quest for mineral riches

Colbert returns in fight-back against big emerging economies 

by David Marsh

Mon 24 Feb 2014

A classical Gallic triumvirate of earth, gold and state has been fused into a global fighting force by France’s new publicly-owned mining company set up to secure mineral wealth around the world.

The Socialist administration of President François Hollande plans to invest up to €400m over the next five to seven years in a state-owned mining company Compagnie Nationale des Mines de France (CMF).

Contrasting with Hollande’s recent tilt to supply-side economics for dealing with France’s problems, the new policy confirms an abiding hallmark of successive French presidents: ambiguity in picking a way between state intervention and private sector orientation in industrial policy.

The founding of CMF, France's first state industrial start-up for 20 years, marks a throwback to France’s historical successes 200 years ago in mining coal and iron ore. From that bygone age, only metals group Eramet and the uranium business of state-owned nuclear firm Areva have survived.

France’s self-confident foray into the state mining sector contrasts with Germany’s more low-key approach. Like the French, the Germans are concerned about the potential securing of world-wide mineral wealth by countries like Russia, China and Brazil – but they are relying on a private sector ‘raw material alliance’ linking large industrial groups such as BASF, BMW, Volkswagen and Thyssen-Krupp.

CMF will prospect for resources – including gold, lithium, germanium and rare earths – in France, French overseas territories and elsewhere around the world, including Africa, Central Asia and South America.

French industry minister Arnaud Montebourg says the government considers the state as an intelligent economic actor serving the interests of the nation. ‘Francophone African countries, notably, would like to work with us …. Colbertism is coming back and that is good,’ he proclaimed last week, referring to Jean-Baptiste Colbert, 17th-century finance minister under Louis XIV and the pioneer of French dirigisme.

The French announcement seemingly confirms a reputation for vacillation between different policy options that Hollande had been struggling to throw off. Earlier this month, Paris agreed to invest €800m to acquire a 14% stake in struggling carmaker PSA Peugeot Citroen, alongside China's Dongfeng. Although Hollande’s recent signals of embracing business orthodoxy have been welcomed as a sign of realism by French industrial leaders, Montebourg has continued loudly to champion the merits of state intervention in industry. This seems to be just one more area where President Hollande has not yet made up his mind.

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