State should get into bed with miners

2010-11-20 07:09

The National Union of Mineworkers (NUM) hinted on Friday that it could support state ­intervention in the mining sector that was based on public-private partnerships similar to those in neighbouring countries.

NUM president Senzeni Zokwana said the models followed by South Africa’s northern neighbours, Botswana and Namibia, were examples whereby the state partnered ­successfully with mining companies to ­mutually exploit mineral endowment.

“In Botswana, the state owns 50% in diamond mining projects, and the private ­partner 50%. You need a private operator ­because it brings know-how, skills as well as funds,” Zokwana said.

The governments of Botswana and Namibia are exploiting their diamond deposits through 50-50 joint-venture companies with De Beers, the world’s largest producer of rough diamonds. In Botswana, De Beers co-owns Debswana with the state and in Namibia it has a similar arrangement through a company known as Namdeb.

Zokwana warned that blanket nationalisation could badly damage the R2-trillion South African mining sector, resulting in thousands of jobs being lost.

His comments followed the announcement this week by the ruling ANC that it planned to appoint two independent researchers and a project manager to investigate successful mine nationalisation models across the world.

The ANC’s decision to investigate nationalisation options ties in with its policy of ­increased state intervention in the economy.

For most of the past decade, government has been involved in the economy through the ­provision of infrastructure.

This year, President Jacob Zuma announced a team that is reviewing the role of state-owned entities and how they can play a greater role in driving economic growth.

The ANC has approached the Council for ­Scientific and Industrial Research and the ­Human Sciences Research Council to help with the research.

The party has not worked out the terms of reference, but said the study would be ­completed before the end of next year. The ­findings of the research would be debated at the ANC’s next policy conference in 2012.

Various interested parties this week took turns to map out their desired nationalisation model.

Chief executive of the Chamber of Mines SA Zoli Diliza said: “We hope that the researchers will investigate all the potential roles of the state in mining.

“These could, for instance, ­include the role of a state mining company and identifying the necessary conditions that are conducive to the rapid growth and ­transformation of the ­industry.

“The chamber has already undertaken a ­significant amount of research into the role of the state in mining and will make this research available to the researchers. The chamber will also engage with the ANC on how the mining industry can assist with the ­investigation.”

The ANC Youth League, the originators of the current nationalisation debate, expressed reservations about “independent” and ­“depoliticised” research, arguing that it should be informed by the strategic vision of the ANC’s Freedom Charter.

Zokwana said the proposed state-owned mining company, seen as a precursor to ­nationalisation of mines, should acquire ­strategic minerals such as coal, uranium and platinum group metals – particularly platinum.

“The state-owned mining company should be activated and then partnered with investors with capital and expertise. The state company must also be heavily involved in the beneficiation of our minerals because we can’t continue to be exporters of raw materials,” he said.

He added that South Africa had already ­nationalised minerals in 2004 when it introduced the Mineral and Petroleum Resources Development Act, which allowed the state to take over mineral rights and liquid fuels.

“The state needs to be involved in ­establishing new mining projects through ­partnerships and it also needs to negotiate for stakes when companies come to it to apply or reapply for mining licences,” Zokwana said.

Duma Gqubule, director of consulting firm KIO Advisory Services, is supportive of the idea of the state increasing its ownership of the mining sector in the next 10 years through a state-owned mining company. He said ­minerals belonged to all South Africans, yet mining companies parted with the lion’s share of the wealth generated by the industry.

“I fail to understand what is wrong with the state increasing its ownership in the mining ­industry. The state can choose to manage the mines or sub-contract their management, as is the case in Chile, or it can choose to own, as is the case in Botswana,” said Gqubule.

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