Nauru - Future trends

Nauru's phosphate industry has reached the end of its life, with the last supplies expected to run out within a few years. It is unclear how the country will support itself once the mines close. Diversification into other economic sectors, such as tourism and offshore banking, have not proven especially successful. Tourism has remained small due to the country's remoteness and lack of attractions. Offshore banking has been marred by scandals involving money laundering and corruption, and the country has been heavily criticized for this. With its tarnished reputation, many foreign companies will be hesitant about investing in Nauru.

The imminent closure of Nauru's phosphate mines mean that the country will be left with no major source of income and with severe environmental problems. About 80 percent of the country has been ecologically devastated by mining, and this land is not suitable for agriculture or for residential property. The cost of rehabilitating the mined-out land is expected to cost at least US$200 million and it is unclear where this money will come from. Nauru's water supply is becoming more limited because of the depletion of natural underground reserves. The country already has to import drinking water.

Income from the country's Nauru Phosphate Royalties Trust will help tide over the country when the mines first close, but it will not be sufficient to replace the income from mining royalties themselves. The trust fund itself has been marred by allegations of corruption and mismanagement, and the ability of the trust fund to keep producing income is questionable.

With its mines closing and its environment in ruins, Nauru faces a grim future. The careful and wise investment of the country's remaining assets—in its trust fund—is the most likely source of salvation for Nauru.