The chief executive of commodities giant Glencore International PLC (GLEN.LC, GLNCY, 0805.HK) Friday issued a stern warning about the impact of nationalization on foreign investment.

Ivan Glasenberg, who is also a director of Xstrata PLC (XTA.LN) which is 34% owned by Glencore, told a mining conference here, "Our associate company Xstrata is about to go in a big expansion of a copper asset in Argentina where they were about to spend $3 billion. That won't happen for the moment," he said.

However Xstrata immediately issued a statement saying the "the status of our projects remains unchanged....Work progresses on the evaluation of our El Pachon and Agua Rica growth projects in Argentina, and we continue to monitor the situation in the country."

Xstrata owns a 50% stake in the Agua Rica project through its joint venture Minera Alumbrera and owns 100% of the El Pachon copper project in Argentina, according to the company's website. Both projects are still in feasibility study and as a result haven't yet been reviewed by the board in order to determine whether the projects should go ahead.

Nationalization has been a growing concern for the resources industry globally as governments have increasingly believed they weren't getting a fair share of profits from mining on their soil. However it has come to a head following Argentine President Cristina Kirchner's decision to seize a 51% stake in the country's largest oil and gas producer, YPF SA (YPF, YPFD.BA), from Spain's Repsol YPF SA (REP.MC).

However Glasenberg didn't mention the YPF nationalization. He also didn't specify which project in Argentina he was referring to. Glencore declined further comment.

A spokesman from Argentina's planning ministry didn't respond to messages seeking comment.

Glasenberg said that mining companies are now teaming up to better defend themselves against resource nationalism.

"The mining industry is very aware of it and forming tight groups amongst each other [about] how are we going to fight it," he said.

Glencore's trading and mining activities range from oil, metals, agricultural products and storage facilities. The company is currently in the process of seeking shareholder and regulatory approval for a merger of equals with Xstrata that would create a mining titan with about a market capitalization of about $90 billion.

Glasenberg warned that resource nationalism could have negative consequences for nations in the long term if mining companies choose to curtail their investment plans as a result of governments wanting to increase their share of the profits.

He sited as an example Glencore's decision to halt its $400 million Bolivian mine expansion project after the Bolivian government nationalized its zinc smelter, which constituted only a small portion of its business.

The $400 million investment "would have created a lot more jobs in the country, it would have created more royalties for the government, it would have created more taxes for the government. They hurt themselves in the long term," he said.

-By Alex MacDonald, Dow Jones Newswires; +44 (0)7776 200 924 alex.macdonald@dowjones.com