To nationalise or not to nationalise mines

2010-02-07 11:13

ARGUMENT AGAINST - By Hlengani Mathebula

NATIONALISATION is the wrong policy prescription for South Africa’s

socio-economic ills of poverty and unemployment. The reason poverty and

unemployment remain as high as they do is not because the country’s mines, for

example, are run by private-sector companies and not state-owned


So shoving a bigger chunk of the country’s economic resources into

the hands of the state won’t create jobs and reduce poverty.

Yet the proponents

of nationalisation continue to trumpet it as the panacea to this country’s

socio-economic ills.

The proponents of the nationalisation of mines and, most recently,

the South African Reserve Bank, have yet to outline a ­cogent case of how state

capitalism on its own will create jobs and reduce poverty. It’s not clear, for

example, how the ownership of the Reserve Bank by private shareholders is a

hindrance to the agenda of a developmental state.

The inflation target that directs the work of the bank’s monetary

policy committee is set by cabinet through the finance minister. It has nothing

to do with the bank’s shareholders.

The calls for nationalisation appear to be based on the assumption

that the state has the capability to run mines profitably and do so for the

benefit of the poor. However, the history of existing state-owned enterprises

calls for caution. With a few exceptions during the past 15 years these

enterprises have lurched from one crisis to another, some becoming regular

recipients of bailouts.

 They have been a drain on limited state finances rather

than being net contributors to economic prosperity.

Most state-owned companies have yet to run with any stability for

longer than five years. SAA, Transnet, the Land Bank, the SABC and Denel have

all had financial and governance problems. Even Eskom, which has long been one

of the best managed parastatals, veered off the good governance track last


Of course, there are exceptions such as the Development Bank of

Southern Africa and the Airports Company of South Africa.

The problems of state-owned enterprises can broadly be split into

two: financial and governance. The latter refers to the regular interference by

political office bearers in the day-to-day running of these enterprises. Boards

of directors of state-owned enterprises have for all practical purposes been

turned into lame ducks as politicians meddle in the running of the firms.

So it makes very little sense for a country that has yet to find a

successful formula for running its existing state enterprises effectively to

create more.

Also, a country with developmental needs as huge as ours can ill

afford to borrow billions of rands from financial markets to buy private

shareholders out of existing mines and the SA Reserve Bank. A cheaper and more

sensible option is for the state to cajole the private sector to buy into its

developmental agenda. In the Reserve Bank’s case the solution, if indeed there

is a problem with how the bank is carrying out its inflation mandate, is much

easier: government must change the bank’s mandate to make it much more

accommodating of its development agenda.

South Korea, Japan and Taiwan rose from the bottom to the top of

the economic ladder propelled by a developmental state model in which their

governments were ­effective. They proved that nationalisation is not a necessary

condition for the success of a developmental state.

  • Mathebula is the non-executive director of Vuma Reputation

    Management. He writes in his personal capacity.

ARGUMENT FOR - By Floyd Shivambu

THE ANC National Executive Committee lekgotla finalised and adopted

a detailed perspective on the nationalisation of mines in South Africa. The

lekgotla agreed that the ANC Youth League’s perspective on the matter is a

coherent, concrete and decisive perspective on how mines will be


Guided by the aims and objectives of the Freedom Charter, the ANCYL

conceptualisation of the nationalisation of mines is that it should result in

the democratic government’s ownership and control of mining activities,

including exploration, extraction, production, processing, trading and

beneficiation of mineral resources in South Africa.

Nationalisation includes the following:

  •  It should be accompanied by a thorough transformation of

    state-owned enterprises.

  •  It can assume various forms: it can be 100% public ownership, or

    51% or more owned by the state, or established through partnership arrangements

    with the private sector.

  •  It will involve expropriation with or without compensation.

  •  It is not meant to bail out indebted ­mining corporations.

The Freedom Charter guides the programme of nationalisation of

mines, but there are other reasons why nationalisation should take place:

  • ?To increase the state’s revenue and improve working conditions.

    Mine workers should be adequately paid and their work conditions improved.

  •  As a basis for industrialisation to create more sustainable jobs

    for our people.

  •  As a means to safeguard sovereignty

  •  As a basis to transform the accumulation path in the South

    African economy, so that the country is not overly dependent on the export of

    natural resources and the importing of finished goods and services.

  •  To transform South Africa’s unequal spatial development patterns

    so that all communities with economic potential are given necessary attention in

    terms of ­development.

For nationalisation to happen, the discussion document adopted out

of this lekgotla specifically proposed the following:

  •  The state should establish a mining company to control the

    country’s mineral resources and bring together all the country’s mining

    interests. Importantly, that company should attract the best skills, ­expertise

    and knowledge.

  •  The state should adopt an expropriation model, which will specify

    how the state should expropriate economic activities with or without


  •  The state should amend the Minerals and Petroleum Resources

    Development Act (MPRDA) to include a clause compelling all mining corporations

    to enter into a partnership with the state for a licence.

The ANCYL will in the next few months engage alliance partners,

business organisations and the Chamber of Mines in the programme towards

consolidation. We will also visit countries that have greater control of

strategic sectors of their economies.

We do not expect capitalists such as Nicky Oppenheimer to support

nationalisation because he is protecting his ill-gotten wealth, currently worth

billions of rands. While not openly supporting nationalisation, Patrice Motsepe

has said in a constructive manner that if it happens in the interests of SA, he

would support it.

If greedy and unethical capitalists think that they have a hold on

the ANC through Mines Minister Susan Shabangu, then they are misled. Shabangu is

not the ANC and does not understand the ANC.

  •  Shivambu is ANCYL spokesperson. The amended Act should apply to new mining licences and all those who seek to renew their licences

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