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South Africa
Politics | Economy - Development

SA considers nationalising mines

South Africa's famous Kimberley diamond mines

© Chamber of Mines/afrol News
afrol News, 16 November
- The South African government is commissioning a report to "investigate successful models that could be considered on the role of the state in mining." Various degrees of nationalisation are to be considered by independent experts.

South Africa's ruling ANC party has been under pressure from the party's left wing to consider a full nationalisation of the country's dominant mining sector. But Minister Trevor Manuel early made it clear that only a softer degree of state involvement in the sector would be considered.

Following pressure from the industry, organised in the Chamber of Mines, the ANC this week agreed to commission a report on the state's role in the mining industry by a group of independent experts from "reputable institutions". The decision-making process therefore has been partly moved out of party offices.

ANC Secretary-General Gwede Mantashe told media that the report was expected to be presented to the party in 12 months. It would then be discussed during the ANC party conference in 2012, when decisions about the ruling party's mining policy and the state's involvement would be made.

The Chamber of Mines yesterday said it "welcomed" that the ANC had "resolved to appoint two independent senior researchers and a project manager to investigate successful models that could be considered on the role of the state in mining."

Chief executive of the Chamber of Mines, Zoli Diliza, said he was "particularly pleased" that the ANC had resolved to get researchers who are independent of the party. "This approach will not only increase the credibility of the findings, but will also ensure a wider support of those findings once the investigation has been completed," Mr Diliza said.

"We hope that, once appointed, the researchers will investigate all the potential roles of the state in mining. These could, for instance, include the role of a state mining company and identifying the necessary conditions that are conducive to the rapid growth and transformation of the industry," the industry lobbyist proposed.

Discussions over a possible nationalisation of South Africa's mining sector reached new heights in September this year. However, Minister Manuel managed to outsmart the

Trevor Manuel, Minister at the South African Presidency

© IMF/afrol News
party's left wing at an ANC conference, which decided that further research was needed before a decision on possible policy changes could be made.

At that stage, the Chamber of Mines, whose members are "emphatically opposed to the nationalisation of the country's mines," were relieved by Minister Manuel's intervention. "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 said in a statement.

"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," according to the South African Chamber of Mines.

"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," the Chamber added, welcoming Minister Manuel's call for more research.

While the decision on a possible nationalisation of South Africa's mining industry effectively has been put off for two years, the ANC's left wing - including the Communist party, the powerful COSATU trade union and the radical Youth League - has announced it will continue to fight for a full nationalisation. COSATU spokesperson Patrick Craven said nationalisation would be necessary to counter "the massive job losses in the mining sector."

Mining is a major contributor to South Africa's GDP, with precious metals contributing over 60 percent to the country's mineral export earnings. The mining industry is also the country's biggest employer, with around 460,000 employees and another 400,000 employed by the suppliers of goods and services to the industry, according to government.

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