Mining wants clarity on nationalisation

27 Jun.

Mining wants clarity on nationalisation.

South Africa’s mining industry will next week meet government officials to “get a feel for their position” on nationalisation.

The Chamber of Mines said on Wednesday that it had invited South African deputy president Kgalema Motlanthe to its strategic planning session and there were indications that Mineral Resources minister Susan Shabangu and the ministry’s director general Sandile Nogxina would be joining him.

Bheki Sibiya, chief executive of the Chamber of Mines, said the industry would also be meeting with the country’s banks to discuss how they can deal with the growing call for nationalisation by the ANC Youth League (ANCYL).

ANCYL president Julius Malema reignited the debate on nationalisation during last weekend’s ANCYL conference, where nationalisation and land expropriation were adopted as policy.

The youth league has lobbied the ruling party to impose rules to ensure that the state owns at least 60% of all the country’s mining assets but ANCYL has not provided any details on how it envisions this being carried out. There are as yet no mechanics setting out exactly how this stake would be transferred and whether or not government would pay for its share. Malema has been suggesting that the transfer take place without compensation.

“They are prescribing the medicine without doing the diagnosis,” said Sibiya, who said it was important to know what the ANCYL was trying to fix.

It is broadly believed that the call for the nationalistaion of key sectors of the economy stems from growing discontent about the poor delivery on transformation targets by these sectors.

“Nationalisation would be the wrong way to go about dealing with these concerns,” said Sibiya.

The mining industry has shrunk in the last ten years and it has just though negotiation with the government and labour agreed to a new growth path.

While nationalisation is seen as destroying jobs on a massive scale, this new growth path is seen as a way to unlock the restrictions holding the sector back.

“100,000 direct jobs by 2020 are possible,” said Chamber of Mines senior executive of strategy, economics and legal issues Roger Baxter.

“But we need to get this debate behind us so that there can be more certainty,” he said.

The chamber said the mixed messages were creating uncertainty over policy.
ANCYL has said nationalisation would be made ANC policy but the ruling party has denied this.

There is, however, research being done on nationalisation which will inform the government’s side of the debate.

The ANC agreed in September to investigate ways of increasing state control in mining, including reviewing the youth league’s nationalisation proposal.

This study is expected to be completed in November and will be put forward at the ANC’s policy conference in 2012.

Sibiya said that means at least 18 months of uncertainty.

For us there is an opportunity cost,  he said explaining that investors could in this time turn to other African or South American countries where there is security of tenure.

Baxter said there was no doubt that all the talk about nationalisation was worrying investors. It creates uncertainty and uncertainty scares investors.

Corporate lawyers warned that the heating up of nationalisation rhetoric was already having an impact on commercial activity.

During a briefing on India investment, Webber Wentzel said it definitely has an impact with Indian investors indicating that they are scrutinising the cost of doing business in SA more closely.

Robert Appelbaum from Webber Wentzel – their Indian investment specialist who has been working with Indian investors for over 20 years – said Indian investors were starting to look beyond SA as a gateway into the continent, with the first signs emerging they are willing to go directly to other more attractive African destinations.

Earlier on Wednesday Ayanda Bam, executive chairman of Kuyasa Mining, said that the country’s black economic empowerment policies had failed black investors seeking access to the mining industry.

He said all the transformation laws had done was create a market for selling mining licences with applicants being granted a mining licence one day and selling it for millions the next.

While he said he would be willing to give up 60% of the mining company he had worked so hard to build, he said there were challenges to new entrants that needed to be addressed.

Bridgette Radebe, executive chairperson of Mmakau Mining, said the issue of nationalisation continued to crop up when BEE was discussed.

She said one needed to understand the frustration of those who had expected more from transformation.

“Within 16 years we should have seen tangible results,” Radebe said, adding that the nationalisation debate needed to be embraced but very carefully otherwise South Africa was heading down the road Zimbabwe had travelled.

Source: Times LIVE