ANC heavyweight weighs in against mine nationalisation

28th April 2010 By: Martin Creamer - Creamer Media Editor

JOHANNESBURG ( – The nationalisation of South Africa's mines "is not supported by strong enough evidence", a senior ANC leader argues in an article that is about to be published in the ANC journal, Umrabulo.

Mining Weekly Online can today reveal that the article is the work of ANC national executive committee (NEC) member Joel Netshitenzhe, who is also a member of the ANC's economic transformation and political education subcommittees.

In what is the most comprehensive response to date by a senior ANC leader to its youth league's strident advocacy of mine nationalisation, Netshitenzhe arrives at the conclusion that the "balance of evidence" is against mine nationalisation.

He says that the ANC has adopted an approach to State ownership, which is different from an earlier interpretation of the Freedom Charter, in which nationalisation was a given.

While the ANC Youth League (ANCYL) may be factually correct in its interpretation of the Freedom Charter in years gone by, Netshitenzhe says that the ANC's current approach to State ownership is to "weigh the balance of evidence" - a process that is informed by the impact that State ownership has on the ability of the economy to address poverty and inequality and to encourage growth and competiveness.

He points out that South Africa's current dependence on the private sector is illustrated by the support that the State-owned Eskom is seeking from it, to ensure that the country has sufficient power capacity.

While the ANCYL is correct to want the mining industry to play a larger role in improving the country's fiscal capacity; creating more jobs; improving working conditions; enhancing South Africa's sovereignty; and transforming the country's accumulation path, he points out that some of the mining industry's most significant growth constraints are bottlenecks within State-owned infrastructure.

In the early days of the implementation of the new Mineral and Petroleum Resources Development Act, insufficient capacity within the then Department of Minerals and Energy and the slow processing of environmental-impact assessments were also growth constraints.

"In this regard, the challenge, quite clearly, is not whether the mines are in State hands or not," Netshitenze says.

However, he adds that several challenges do point to the need to attend to macro issues in the industry, including declining fixed investments and low growth in mining production, in the midst of a commodities boom.

This stands out even more starkly when compared with Australia, where gross fixed investment in mining far exceeds South African investment.

Secondly, little progress has been made in developing the much-vaunted mining sector strategy as part of the country's industrial policy and action plans.

Thirdly, South Africa can hardly claim to be exploiting the opportunities for mining-related backward and forward linkages optimally. With regard to beneficiation, for instance, the impression among many in government is that there is a dogged resistance to a comprehensive approach to beneficiation within the private sector.

Fourthly, besides weaknesses of demographics in management, professional, skilled and semiskilled categories, the industry is "not producing sufficient skills to replace the ageing engineering and artisan population, let alone gear the industry for growth".

The fifth challenge is about the extent of commitment to cutting edge research, especially in the platinum sector.

He says that the State - which is already the custodian of the mineral rights and which already levies royalties - is building capacity to lead economic development in partnership with all stakeholders, including the private sector, which will need to adopt long-term objectives.

"They will need to determine the role of each partner, the weaknesses that need to be addressed, as well as the benefits and sacrifices that attach to each choice made to move South Africa onto a higher growth trajectory," he says.

This approach does not preclude the consolidation of the State's mining assets in a company that plays an important role.

Even more critical, are the strategic issues about the role of some of South Africa's minerals in the world's scientific and technological development trajectory, with major implications for the country's place in global geopolitical dynamics.