Cape Town - Nationalising mines could result in a burden on the fiscus, said President Cyril Ramaphosa.
He was answering questions from MPs in Parliament on Wednesday. Economic Freedom Fighters MP Mbuyiseni Ndlozi asked Ramaphosa about the nationalisation of mines.
Ramaphosa said it is tempting to think nationalising mining companies which make a lot of profit could bolster state coffers. But there is also a burden to capitalise the mines which should be considered, he explained.
A mine could yield profits, but a mines are subject to commodities. If commodities tank, money will have to come from the fiscus, he explained.
Ramaphosa said that the risks and dangers have to be examined. “You could be pouring money down the drain.”
He explained there is a risk in pouring billions into holes into the ground, and having to contend with volatile commodity prices.
Bust and boom
“Sometimes there are years of drought and years of boom. Mining in the most part can go bust or have great years of boom.” South Africa’s developmental state will be subject to those processes.
Ramaphosa advised Ndlozi to do research on the matter and engage with people “who have experienced it”. He added that Ndlozi should talk to new Mineral Resources Minister Gwede Mantashe about mining, as he has been in the industry.
“Mining is an industry that is not for sissies,” he concluded.
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