South Africa says no to mines nationalization
The South African government has quashed persistent rumours about nationalizing the country’s mining industry.
AFP reports the government has no plans to nationalize its mines despite the radical rhetoric being espoused by some in the ruling ANC party:
“As we speak, nationalisation is not a policy of the government or ANC,” Godfrey Oliphant, deputy minister for mineral resources, told a round-table ahead of the Mining Indaba in Cape Town, the largest mining industry gathering in the world.
“I can’t put my head on the block about nationalisation but we are definitely going ahead with the beneficiation policy. We want a model where everyone works together, the private sector, state-owned enterprises and government, that benefits all South Africans,” he said.
While an ANC report last week stressed that nationalization would be unaffordable — the government would need to raise R1 trillion ($125 billion), more than its entire budget, to buy out listed mining companies – the party is considering other plans to increase state involvement in the sector, particularly with regard to platinum.
The New Age paper reported “proposals included a 50% tax on the sale of mining rights to prevent speculation. A windfall tax of up to 50% on super-profits, defined as a return on investment of 22%, was also included. However, the royalty tax would be reduced from four to one percent.”
Firebrand Julius Malema, the leader of the youth wing of the ANC which often acts as kingmaker in the country’s politics, spearheaded the campaign to seize mines, farms and banks last year.
Malema is never far from headlines in the country with racially charged comments but an anti-corruption police unit is probing his business dealings and last week his suspension from the ANC for “bringing the organization into disrepute” over an unrelated matter was upheld.
A closely watched survey by the Fraser Institute shows South Africa’s appeal for mining investment has declined dramatically since 2006.
In 2006 South Africa was ranked 37th out of 64 countries and territories. The country’s position has declined since then and its 2010 ranking was 67th in an expanded survey of 79 countries and territories.
The mining sector in South Africa contributes 9.6% to GDP and employs 3.1% of the country’s labour force. In 2010 the sector contributed 15.3% of country’s exports.
A Citigroup report in 2010 states of South Africa’s $2,500 billion worth of reserves, $2,300 billion resides in the platinum group metals. In dollar value Guinea, South Africa, India, the Ukraine and Kazakhstan are the countries that under-produce the most in terms of their reserves: