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ANC Say No To Mine Nationalisation

Nationalisation is dead: long live beneficiation.
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Has the ANC woken up and smelt the coffee? A platinum smelting works in Rustenberg.

South African president Jacob Zuma attempted to lay fears of mine nationalisation to rest this morning at a televised business meeting. "Nationalisation is not our policy – it's as clear as that," Zuma announced, to general applause. The president went on to stress that the policy of the ruling African National Congress (ANC) is to manage a “mixed economy”.

Just say no

This announcement comes three days after mining resources minister Susan Shabangu assured international delegates at the annual Mining Indaba that nationalisation was off the table. She went on to say that the future of mining in South Africa would be “beneficiation” – whereby resource value is maximised by developing industries related to the minerals concerned. This process, she explained, would be “the vehicle through which South Africa's resource-based comparative advantage can be transformed into a national competitive advantage".

The statements were designed to draw a line under the ANC policy probe into mine nationalisation carried out last November. The investigation was mandated by the ANC’s national general council, and was widely thought to have been instigated by the ANC’s Youth League (ANCYL).

Julius Malema, the radical head of the youth league who led the campaign for nationalisation, was suspended last year for his offer of ANCYL support to opposition parties in Botswana. He was subsequently expelled from the party, and is also on trial for anti-Afrikaner hate speech. Julius Malema is certainly not out of the picture (today he openly attacked the ANC leadership at the opening of an ANCYL legotla) but his ability to push nationalisation from within the party has been hamstrung.

Leaks and sneak peaks

Although the ANC leadership is eager to distance itself from the mine nationalisation movement, a leaked draft document on the beneficiation policy, which will make up part of the “State Intervention in Minerals Sector” report, draws on Nordic models of intervention and mineral export taxation to grow the local manufacturing industry. At the same time, government research has advocated hiking taxes on mineral company profits to 50%.

Meanwhile, there are proposals for mining trade unions and development finance institutions to pool their pension funds into a special-purpose vehicle to increase stakes in listed companies. Sasol, the mining and petrochemical company, was signalled out for state intervention, with a proposal that the ANC-affiliated trade union federation COSATU would use its pension fund to buy a controlling stake in the company, which would be managed by the union and a government “super ministry”, made up of five separate ministries.

Digging a way out

Responses from industry leaders have been unsurprisingly frosty and many fear the possibility of nationalisation by stealth. Meanwhile, South Africa’s mining sector is currently facing soaring costs, and the opposition Democratic Alliance has warned that a mining supertax could cost jobs.

However, such attacks have perhaps been softened by the clear indication that mass government controlled nationalisation of the mining industry is being taken off the agenda. As well as rejecting nationalisation, Shabangu has tried to downplay the likelihood of a supertax and draw attention towards the equitable and decentralised elements of beneficiation.

This is probably not a coincidence. It must be assumed that by promising an end to the discussion on nationalisation, the ANC hope to gain traction for their own plans to reform the industry. The real question is whether they are pushing these policies to appease party members angered by the swift defanging of the ANCYL, or whether it was only with the contentious figure of Julius Malema safely out of the way that they could make such a potentially divisive move.

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