JOHANNESBURG (miningweekly.com) – Resource nationalism is by definition not a bad idea, as it is an accepted method for governments around the world to extract sufficient rent from the limited resources they have, investment banker Rothschild South Africa CEO Martin Kingston said on Wednesday.
However, he pointed out that South Africa already had an overburdened social budget, and that it would not be ideal to divert money away from social spending to developing mines.
“There are perhaps too few facts on the table when it comes to talks about mine nationalisation, with a lot of the debate being emotionally driven,” Kingston said at AngloGold Ashanti/Motjoli Resources’ Mining for Change seminar, in Johannesburg.
The intended keynote speaker of the seminar, African National Congress Youth League (ANCYL) president Julius Malema, who is driving the nationalisation debate, was absent from the gathering of high-level private sector delegates.
The reality was that the country’s mineral resources had to be exploited to the benefit of the citizens and that the money generated from such activities should be used to confront South Africa’s challenges of poverty, growing inequality and access to social services.
Kingston said there had been much debate about whether black economic-empowerment (BEE) was reaching its goals, as there is a perception that corporate entities only did the bare minimum to satisfy the requirements of agreements and charters.
“If they really did embrace social transformation through ownership, management, control, employment equity, skills and enterprise development, there is no doubt we would witness more social integration and economic liberation of South Africans, than we have to date.”
“BEE goes to the very heart of the social and economic transformation of South Africa,” he said.
Further, continued scepticism was fuelled by unreliable data that undermines the progress that has been made.
Kingston pointed out that the South African mining industry was under pressure, as it was heavily reliant on international capital, which had shrunk as a result of global economic uncertainty.
Further, South Africa’s mining industry is in structural decline, and had shed about 500 000 direct jobs in the past ten years as a result of dwindling resources and rising costs. A lot of scepticism remained as to how government would be able to create jobs, where the private sector was seemingly failing.
Kingston said that government should focus its efforts on establishing a transparent, predictable and accountable regulatory environment, especially when it comes to the issuing of new mining licences.
Further, the role of government is to provide and create infrastructure, such as electricity and water, so that the miners could deliver commodities effectively. Government should also administer the taxes and royalties it received for its minerals to attend to the country’s social priorities.
“More high-level government intervention and commitment is needed to ensure that the monies realised from nationalised mining indeed reached the people it is intended for,” he said.
Meanwhile, Centre for the Study of Democracy director Steven Friedman reminded delegates that there was no proposal for nationalising the mines on the table yet, but that there may be one next year.
He highlighted corruption among the politically connected and elite as one of the biggest pitfalls to look out for in the nationalisation of mines. “There is an acute problem in our society, it is urgent and needs to be dealt with as soon as possible. The elite cannot be allowed to distort the process of transformation.”
Friedman also pointed to the racially unequal economy – the legacy of apartheid – that still prevailed today.
“We purport to be dealing with it, by giving away slices of equity to empowerment partners. BEE has not failed, it was not tried yet. What we have been seeing in the past 18 years is exactly what the youth league is asking more of,” he said.
He added that, if the ANCYL did not speak on behalf of the poor, nobody would.
“Racial equality needs to be talked about very urgently. We have a unique opportunity at the moment to get this right,” he said.