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Send  Share  RSS  Twitter  27 Sep 2010

MINING: Chamber Encouraged By Government View on Nationalisation


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The Chamber of Mines and its members are encouraged by the statement issued this morning by the Minister in the Presidency, Mr Trevor Manuel, which questions the logic of calls to nationalise the country’s mines. Minister Manuel correctly draws attention to the prohibitive costs of nationalisation and places doubt on the legitimacy of using taxpayers’ money to fund the acquisition of mines.

The Chamber and its members are emphatically opposed to the nationalisation of the country’s mines. Nationalisation is an antiquated and universally discredited political practice that will have disastrous consequences for the national economy.

Nationalisation has not worked in any country in the world and neither will it work in South Africa. History is littered with numerous examples, several of them in Africa, of how nationalisation has impoverished countries. To nationalise South Africa’s mining sector would create potential for our country to be declared a pariah by the global investment community. Investment flows into the country would be substantially diminished, inhibiting economic growth, reducing employment opportunities and exacerbating already unacceptable levels of poverty.

Zambia’s nationalisation of its copper mining industry in 1972 is just one African example of the debilitating effects of nationalisation. Within two decades of the government taking ownership of its copper mines, Zambia’s levels of copper production plunged to less than half the pre-nationalisation level. In recent time the Zambian government has invited the private sector to once again take over the country’s copper mines and the industry is now flourishing. The Zambian experience is enlightening and it is incomprehensible how the authors of the Kio Advisory Services report released earlier this week could have arrived at their conclusion that what transpired in Zambia presents good reason for our government to nationalise South Africa’s mines. Such illogical reasoning raises suspicions about the motives of both the authors and the sponsors of this so-called research.

We are very pleased with the mature and pragmatic approach taken by the ANC on this important topic. For far too long, this issue with its potentially damaging impact on the national economy and the livelihoods of hundreds of thousands of South Africans, has been discussed without proper research to determine its true impact. Minister Manuel’s observation that nationalisation of the mines needs to be examined over the next two years by the ANC’s National Executive Committee (NEC) to answer the question of precisely what it means, is a particularly significant commitment that is welcomed by the Chamber. The industry, as represented by the Chamber, will participate vigorously and constructively in the debate that takes place. .

In examining the modalities and options open for the mining sector, the Chamber urges the ANC to look deeply into the demands of meaningful transformation of the mining sector so that the likelihood of the success of transformed entities is enhanced. The research conducted by the NEC should aim to identify cases where attempts are being made to have the State bail out failed enterprises at taxpayers’ expense. While the Chamber and its members are truly committed to the transformation of the industry, it is additionally imperative that the beneficiaries of transformation fully understand that they are entering into business transactions in which they will have to share risks in the same manner that they enjoy rewards. It is not acceptable practice to take profits and then externalise your liabilities to the taxpayer.

During the course of the past year major stakeholders, including government, organised labour and representatives of the industry have engaged in a positive initiative which is focused on securing the sustainable growth and meaningful transformation of the mining industry. Led by the Department of Mineral Resources and conducted in the Mining Industry Growth, Development and Employment Task Team (MIGDETT), the process has produced many positive outcomes that will be included in the development of a strategic growth path for our country’s vibrant mining sector. Significantly, nationalisation has not been recommended by any of the stakeholders engaged in the MIGDETT process – including the alleged sponsors of the Kio Report - as an effective instrument to enhance the prosperity of the industry and to improve its contribution to socio-economic development in South Africa.


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