The ANC would not nationalise mines as it was not viable for South Africa, Mineral Resources Minister Susan Shabangu confirmed.
The divisive and destabilising debate about nationalising South Africa’s mining sector that has been blamed for declining investor confidence in South Africa was shut down firmly at the African Mining Indaba in Cape Town yesterday.
The ANC would not nationalise mines as it was not viable for South Africa, Mineral Resources Minister Susan Shabangu confirmed.
“I welcome the fact that the report of the ANC’s task team on nationalisation has reinforced the ANC’s earlier decisions that nationalisation is not a viable policy for South Africa,” she said. “The ANC will adopt a policy position on this issue that is in the best interests of South Africa.”
The task team said nationalising the country’s mines would be disastrous and increased taxes on the industry should be considered instead.
“Nationalisation without compensation would require a constitutional change and would result in a near collapse of foreign investment and access to finance, as well as widespread litigation by foreign investors,” read a copy of the study, obtained by Bloomberg.
“This route would clearly be an unmitigated economic disaster for our country and our people.”
The nationalisation study was commissioned by the ANC under pressure from a strident campaign driven by Julius Malema, the president of the ANC Youth League, whose appeal against suspension from the party failed at the weekend.
Malema and his supporters, who said the black majority received no benefit from South Africa’s mineral resources, had argued that majority stakes in mines should be taken over without compensation.
The study’s proposals are due to be considered at ruling party conferences in June and December.
South Africa is the world’s biggest producer of platinum, chrome and manganese. Anglo American, Xstrata, Rio Tinto and BHP Billiton have operations in the country.
Buying the country’s publicly traded mining companies would cost almost R1 trillion, which is more than the national government’s annual budget, the study says.
Shabangu declined to comment on the contents of the report. She confirmed that it argues against nationalisation and said its findings might not necessarily be implemented.
“That’s a study,” Shabangu said in an interview in Cape Town. “We have got our own internal process. We have to have a tax (that) would be competitive, especially in relation to other mining jurisdictions.
“For the past decade we talk about having missed the previous mining boom.”
Shabangu blamed the mining sector for creating the debate about nationalisation by not implementing provisions of the mining charter and the Mineral and Petroleum Resources Development Act.
She said this was because of, among other things, the practice of fronting, where companies circumvented the Broad-Based Black Economic Empowerment Act.
She said a beneficiation strategy approved by the cabinet last year was not intended to force mining companies to beneficiate, but to give investors access to resources. The strategy aimed at creating jobs in the mining sector and maximising returns from South Africa’s mineral deposits.
The five value chains that have been identified for beneficiation are manganese, iron ore and steel, energy autocatalytic converters, titanium and the jewellery value chain.
On Monday Planning Minister Trevor Manuel told mining indaba delegates that the industry needed policy certainty. “The mining sector is so fundamentally important as a platform to construct the ‘upliftment’ transition that we can’t be able to take this idea of nationalisation forward,” he said.
“If some doomsayer comes along and generates another lie ‘about nationalisation’, don’t believe them.”
Source: Business Report
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