Analyse two advantages to the government of country G that could result from the nationalisation of LBM.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2025). The mark or mark type is shown in brackets.

1. [1] Definition or explanation of nationalisation: ownership of a business is transferred from private to public.
2. [1] Government control over the development of a scarce resource.
3. [1] Funding for research and production can be guaranteed.
4. [1] Profits paid to the government not to shareholders.
5. [1] Enables lithium production in country G even if this is marginally profitable or loss making.
6. [1] Minimises possibility of foreign takeover.
7. [1] Restricts monopoly power to charge high prices.
8. [1] Can ensure that the business acts in the public interest e.g. reducing externalities
9. [1] LBM is the only business in country G planning to mine lithium.
10. [1] Government concern that demand from industry for lithium in country G will not be met in the long-term.
11. [1] Prevent a hostile takeover from a multinational business.
12. [1] LBM is currently unprofitable, but revenue is forecast to rise rapidly.
13. [1] Possibility of future price rises/profits as demand to supply ratio increases.
14. [1] Pollution from production of lithium
15. [1] Lithium is an essential raw material used in batteries for electric vehicles, smartphones and other products.
16. [1] By controlling the only source of lithium in Country G, the government can ensure that local industry demand is met, preventing supply bottlenecks.
17. [1] Nationalisation prevents a hostile takeover by a multinational business, ensuring future forecast rapidly rising revenue remains within the country.
18. [1] The government can absorb the initial losses of the currently unprofitable LBM to secure control over a crucial long-term resource, mitigating uncertainty regarding private sector commitment.
19. [1] Government control means control of supply to battery producers, maximising country G production capabilit.
20. [1] Profits to the government likely to be higher source of income than tax receipts to shareholders and will therefore support government spending on its objective.
21. [1] Supports key economic sectors like electric vehicles thus promoting economic growth.
22. [1] Retained revenue can be used by the government to fund public services or infrastructure.
23. [1] Encouraging investment in manufacturing in country G.
24. [1] Reducing reliance on foreign import.