JOHANNESBURG (miningweekly.com) – South Africa needs to ask itself how it will mobilise the money to pay for the next 100 years of mining, says Business Leadership South Africa chairperson Bobby Godsell.

He was speaking during discussion time at the fifth of six AngloGold Ashanti/Motjoli Resources’ Mining for Change seminars, where he was the keynote speaker.

The discussion culminated in both he and the African National Congress Youth League (ANCYL) treasurer Pule Mabe agreeing that dialogue on the mine nationalisation issue should be ongoing to allow for a level of agreement to be reached.

Godsell said that South Africa would not have ended apartheid had it not agreed to disagree on some issues.

“Let’s move forward on what we agree on,” Godsell said.

Mabe said that the dialogue should continue on how mining could best contribute to the creation of jobs and the elimination of national grievances, adding that if nationalisation was not an option, then an alternative option should be advanced.

Godsell told the meeting, which was chaired by Motjoli Resources executive chairperson Nchakha Moloi, that the proposal to nationalise was an unhelpful answer to an urgent and vital group of questions.

“In the interests of all South Africans, we need to recast this debate in a way that will better serve future generations,” Godsell added.

To point out the capital intensity of mining and the drain that it could become on the fiscus, he said that that in 2009 alone, the South African mining industry found it necessary to invest R51-billion to sustain existing levels of mining and to plan for future levels of mining.

In the same year, the industry paid out R25-billion in dividends to shareholders.

Had the South African government become the owner of the mines in 2009, South Africa’s National Treasury would have had to fund the difference between the capital investment and the dividend flow – R26-billion – from taxpayers’ revenue.

Moreover, that R26-billion investment would have been on the assumption that nationalisation would take place without compensation, as is currently postulated by the ANCYL. If compensation were paid, it would be considerably higher.

The question Godsell wanted answered in the ongoing dialogue was whether South Africa would source its next century of mining funding from increased taxes, national savings, foreign investment, donor aid or from a combination of all of those sources of capital.

The government, he pointed out, was already finding it hard to fund public energy and transport infrastructure and the current toll tariff debate demonstrated the challenge of raising funding for the building and maintenance of freeways.

He said that the proposal of the ANCYL to nationalise showed a misunderstanding of the role of the modern State.

The growth and advance of the post-capitalism society had produced governments that were much more able to regulate most aspects of modern life, including the economy, and the economic growth of the modern world was being funded by the pension funds and provident funds of employees and from the contributions to life insurance policies.

Godsell pointed out that of the 12 demands that the ANCYL made to the Chamber of Mines of South Africa in its recent ‘march for economic freedom’, eight were already effected by government regulation and did not require mine ownership, including the development of skills and education and the provision of safety, pay, local procurement, social and labour plans and health. Regulation was also on the way for minerals beneficiation, another of the ANCYL demands.

“I believe 9 out of the 12 demands can be met with regulation,” Godsell said.

Of the demands not covered by regulation, one was naïve in that it called on mine owners to cease their disinvestment threats in the face of nationalisation calls, and the other two were that 60% of mines should be nationalised and that the Constitution should be amended to allow for nationalisation without any compensation.

The dialogue with the ANCYL should also provide an answer to the question of how mining could better benefit mine employees, the National Treasury, local communities and the national economy, against the dire background of only 41 out of every 100 South Africans between the ages of 15 and 65 being economically active.

Mabe said that when mines disinvested, it was invariably left to government to deal with the rehabilitation and other issues left behind and government ownership of mines would provide better focus and a greater potential contribution to the national fiscus.

“Mines have been freeloaders in this country for a very long time,” Mabe said.

In a nationalised environment, energy and rail prices could be lowered for the benefit of the diversification of the South African economy and the potential for investment into local community development was greater.

VIGOROUS GROWTH NEEDED

Godsell said that to eliminate South Africa's inequalities, the country's economy would have to double in size in the next 20 years.

This would be possible with an economic growth rate of 5.5% a year for the period, but the inclusive growth would require both new leadership and new relationships.

It would no longer be only annual wage increases that business and labour would have to negotiate, but they would also have to negotiate plans to double the size of their companies and their industrial sectors through product improvement, greater efficiency, better service and more employment.

There would be no economic freedom without dramatic economic growth and no sustained economic growth without much greater economic freedom – “it’s not either or, it’s both,” Godsell said.

Business would need to embrace social cohesion from inner conviction and not merely as a public relations exercise.

“Without social cohesion, we won’t have growth and the society will fall apart,” Godsell said.

Labour and also the ANCYL needed to embrace economic growth, not as an inconvenient limitation for other things, but as something that was profoundly necessary.

He concluded by quoting an American writer as saying that the main causes of the 2008 economic meltdown were that the rich were left with so much money that they could afford to binge on speculation and the middle class were left in debt after buying things they imagined they deserved. Meanwhile, inequality was imprisoning people in the circumstances of their birth and needed to be ended.

Acting Economic Development Department deputy director general and former Ekurhuleni mayor Duma Nkosi, who also addressed the meeting, said that a number of different government accords were providing the building blocks for the successful implementation of the country's National Growth Path and that processes were being put in place to provide the necessary public infrastructure for mining activities.

Nkosi added that stakeholders within the mining industry had the advantage of being able to work together under the Migdett task-team umbrella, which offered a collaborative approach to problem solving and provided a platform for the achievement of sustainable growth and transformation.
 

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.