Government intervention in the mining sector

A week of high drama at the ANC policy conference could
end with a highly controversial resolution on the
nationalisation of mines. While the resolution could have
far-reaching consequences for South Africa’s economy, it is
already causing a fallout within President Jacob Zuma’s
camp in the ANC.
The ANC could decide on today to introduce limited
nationalisation of mines in South Africa as part of the
"radical shift" in economic policy the party is pushing for.
The party’s policy conference, wrapping up in Midrand this
afternoon, could opt for 30% state ownership of mines,
based on discussions at the commission dealing with state
intervention in the mining sector.
The proposal for the 30% state share in mines was made to
the commission by ANC secretary general Gwede Mantashe.
The ANC’s senior leaders have, up to now, fought off
attempts to put nationalisation on the ANC agenda, despite
concerted attempts by the ANC Youth League and the
National Union of Metalworkers to strong-arm the party
into adopting the policy, reasoning that in this way, all
citizens benefit from the country’s mineral wealth.
However, President Jacob Zuma indicated in his opening
address to the conference, and during a media briefing this
week, that he wanted the conference to look into
extraordinary measures to accelerate economic
transformation. He said South Africa’s high rate of poverty,
inequality and unemployment levels necessitated "radical"
and "dramatic" change. He could not say what these
changes would entail.
In a surprise move, Mantashe proposed to the commission
on the mining sector that instead of black economic
empowerment shareholding in mines, the state should have
a percentage share in mining ventures. The proposal by
Mantashe came in spite of a study commissioned by the
ANC’s national executive committee advising against the
nationalisation of mines.
Following heated debate at the ANC’s national general
council in Durban in 2010, when former ANC Youth League
president Julius Malema and his supporters tried to force
the ANC to adopt a resolution on nationalisation, it was
decided that the NEC should carry out an in-depth study on
how to leverage the country’s mineral wealth.
The report, which is contained in the battery of discussion
documents before delegates at the policy conference,
states that it would cost the state just under one trillion
rand to acquire listed mining companies in the country –
which exceeds the entire government budget.
"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 This route would
clearly be an unmitigated economic disaster for our country
and our people," the report states.
However, Mantashe’s proposal would seemingly apply to
new mining ventures with lucrative prospects, so as to
prevent the state adopting debt in existing mining
companies or having to deal with the issue of
This proposal has not yet been tested before the full
plenary of the policy conference, and will only be discussed
this morning before Zuma delivers the closing address.
However, Mantashe’s support for limited nationalisation
has now pitted him against others in Zuma’s camp, who
oppose the proposal. Police minister Nathi Mthethwa, who
wields strong influence over Zuma’s KwaZulu-Natal
constituency, told the plenary on Thursday that the office of
the secretary general should not be articulating policy, and
that this should be the domain of the president’s office.
Both Mantashe and Mthetwa are key to Zuma’s re-election
The nationalisation proposal could provoke fierce debate
today, or could be deferred to the national conference in
Mangaung for a final decision.
Either way, this week’s conference has brought to the fore
serious fissures in the ANC, which are likely to deepen as
the leadership battles intensify in the build up to the
December elective conference.
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