ANC wrong on mining: DA

By Drum Digital
09 July 2012

The ANC appears to be choosing the wrong option again on policy decisions in the mining sector, the Democratic Alliance said on Monday.

It was no surprise to find that resource nationalism had just been identified by international accounting heavyweight Ernst and Young as "the number one risk for mining and metals companies around the world", DA spokesman James Lorimer said in a statement.

A number of international ratings agencies had recently highlighted the same concerns, he said.

"When will the ruling party start to acknowledge the evidence and start picking the right options?"

Ernst and Young's "Business risks facing mining and metals 2012/13" report attributed the global risk to an "expanded footprint" of resource nationalism, which often included a complex web of government interventions such as mandated beneficiation, banning exports of unprocessed raw materials, limits on foreign ownership, and super-taxes on large profits.

"These are the very things that the ANC has endorsed on the back of its ‘State Intervention in the Minerals Sector' document released in January," Lorimer said.

"When there is a policy decision to be made in the mining sector, the ANC can reliably be expected to choose the wrong option.

"Despite optimistic reports to the contrary, the ruling party has not yet definitively decided to drop mine nationalisation in favour of its slightly less evil twin, a combination of a mineral resource rent tax and expanded state mining company."

This followed the ANC's record of doing everything most guaranteed to shrink South Africa's mining sector with the concurrent loss of government revenue and, most importantly, jobs.

Over the past ten years, both the Mineral and Petroleum Resources Development Act (MPRDA) and Mining Charter had had a significant impact on the South African mining industry.

These regulatory frameworks had no doubt contributed to the fact that South Africa's mining output in February was the lowest in 50 years, and that the industry lost 179,000 jobs between 2001 and 2011.

In the ANC's current drive to transform the mining industry both the MPRDA and the charter fell under the broad heading "resource nationalism".

The evidence was now clear that these proposals would cause South Africa to lose even more global market share in the mining business at the very time South Africa should be seeking to gain on its competitors.

The global economic downturn, predicted to dip drastically again next year, was already threatening the long-term profitability of the mining industry.

"Along with domestic concerns of insecure electricity supply, labour volatility and ore bodies being increasingly expensive to access, the industry does not require further obstacles from a government intent only on extracting rent rather than creating jobs," Lorimer said.

"As international evidence against resource nationalism continues to mount, we wait with baited breath for a fresh policy perspective from the ANC."

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