A challenge for the new minerals and materials rich nations is downstream diversification in the processing of some of these materials. There are three pitfalls in this connection. The first is to do with “Dutch Disease” or the adverse macroeconomic consequences of a resource boom, requiring policies to prevent excessive real exchange rate appreciation and cyclical government expenditure. The second pitfall is associated with risks that the diversification, once adopted, ends in failure. This requires the avoidance of ‘White Elephant’ projects, sound investment strategies and a well-functioning institutional framework minimising political influence. The third is associated with institutional malfunctioning that encourages corruption, rent seeking, and strengthens autocracy. The solutions lie in sound macroeconomic management, prudent husbanding of resource rents and sound targeted industrial policies. The curtailing of corruption can be achieved by greater delegation outside the national political system, such as with some international sovereign wealth funds.