Fin24

Mines nationalisation not SA policy - Zuma

2012-02-10 08:31

Johannesburg - President Jacob Zuma squashed more than two years of talk on Friday about the nationalisation of South Africa’s massive mining sector, saying state control or ownership of the mines in the world’s biggest platinum producer could not work.

Asked during a televised breakfast briefing if the government planned to nationalise mines, Zuma said emphatically: “We’re very clear. It is not our policy. We’ve been saying this inside the country, outside the country. It cannot be.”

“We have answered this question many times. We are very clear,” he added. “Our policy is mixed economy.”

Coming at the end of a week in which two senior ministers dismissed nationalisation as unviable and the ruling ANC released a study describing it as an “unmitigated disaster”, Zuma’s comments lay to rest two years of debate that hit South Africa’s image as an investor-friendly emerging market.

Radical elements within the ANC are still likely to float an idea first raised by Youth League leader Julius Malema, especially as the party approaches major conferences in June and December.

However, Malema’s suspension from the party at the end of last year for disciplinary offences and the growing ranks of declared and heavyweight opponents of nationalisation mean the idea is not going anywhere.

“You cannot ask for greater clarity,” said political consultant Nic Borain. “If you look at the words the document uses, and you take what Zuma said today, I think we can put this issue to bed.

“Read altogether, this is the ANC very clearly saying ’Our task as government is to get the most out of these resources.’ Nationalisation would be a catastrophe.”

Higher taxes

Even though the big threat has been removed, South Africa’s mining sector - the fifth biggest in the world by value - faces the prospect of higher taxes and royalties as the government tries to squeeze out better returns for the country’s 50 million people.

The ANC has always had a testy relationship with the mines, the economic backbone of the apartheid state, and affirmative action policies since the end of white-minority rule in 1994 have struggled to overturn that legacy.

The mining research released this week proposed a hefty 50% tax on profits once a “reasonable return” had been achieved, although it offset the impact with a promised reduction in mineral royalties.

Economists said hiking taxes for a sector that is also facing rising labour and power costs should not be undertaken lightly.

“We keep looking over our shoulder at the legacy issues, when the rest of the road ahead is full of pot holes,” said Colen Garrow, an economist at investment firm Brait.

“Taxation has to be taken very sensitively because the industry locally is in recession.”

The government is also in the process of building a state mining company to ensure cheap domestic supplies of minerals such as coal and iron ore that are essential to a developing economy. Some analysts believe this may yet evolve into significant state control of specific areas of mining.

“While I am convinced that general nationalisation is not on the cards, I don’t believe targeted nationalisation is no longer a consideration,” said Allan Reid, a director at law firm Cliffe Dekker Hofmeyer. 

Comments
  • lebo.lathane - 2012-02-10 08:42

    The president has spoken!

      Thelma - 2012-02-10 10:27

      He should have spoken from the start....instead we have foreign investors pull their cash and run....the damage has been done and now we have to deal with the consequences of ANC non-performance!!!!

      richard.hipkin - 2012-02-10 11:20

      @Thelma, the ANC have always said that Nationalization is NOT policy but that a debate around the issues are ongoing.. This has been said countless times. You have been listening to the rantings of the young ones and taking that as what is happening.

      Thelma - 2012-02-10 11:35

      @ Richard - Instead of him reassuring foreign investors that no nationalization would take place because it is not ANC policy he entertained the ANCYL which caused foreign investors to pull their cash which caused fear into our financial markets. Why debate something if you know it is not your policy and that it is going to cause havoc on the economy?

  • Jaba - 2012-02-10 08:43

    how bout education... is that SA policy - cause right now it doesnt seem so.

  • Wimpie.Haefele - 2012-02-10 08:46

    Thank you for clearing up this issue now was it that difficult

  • Moss - 2012-02-10 08:49

    YOU DR ZUMA MUST VACATE THAT SEAT IN MANGAUNG, YOU ARE NOT TOWING THE LINE AS MANDATED BY THE MASSES!!LOL

  • Ismail - 2012-02-10 08:58

    How many times does this guy have to say the same thing?

  • Bongani - 2012-02-10 09:15

    Yes Zuma it is not SA policy, that’s why it is being proposed to be looked at. I am not saying it is the right thing, but it is on the table for discussion. it is like saying divorce is not a policy in my house but you wife is filling for it. It is on the table for discussion sir, its either you sign those paper or do not.

  • Moss - 2012-02-10 09:17

    Let have a look at this week ... On Monday, at the mining indaba, Planning Minister Trevor Manuel said "The South African mining industry’s contribution to the South African economy had shrunk from R103-billion in 1993 to R93-billion in 2009, despite the global commodity boom and the talk of the so-called super cycle" and "Nationalisation, apart from everything else, will also require significant investment to advance in the industry. The country doesn't have the resources; it clearly is not a smart strategy," On Tuesday, Mineral Resources Minister Susan Shabangu said at the Indaba "the report reinforced the ANC's earlier decision that nationalisation was not a viable policy for South Africa". On Wednesday, ANC spokesman Keith Khoza said "This is just a report that will be processed.It will be taken to ANC branches and structures for discussion so that they can give their own input in terms of the content. The report carries no weight ..." Today we have the President saying "mixed economy" Who do you believe? Or as a mining company do you just invest elsewhere i.e. most of the rest of Africa, that is looking so very attractive and has firm policies and decision makers in place.

      Moss - 2012-02-10 11:34

      Whos who here, I rule here not you, pls change your name!!

  • Bongani - 2012-02-10 09:18

    Yes Zuma it is not SA policy, that’s why it is being proposed to be looked at. I am not saying it is the right thing, but it is on the table for discussion. it is like saying divorce is not a policy in my house but your wife is filing for it. It is on the table for discussion sir, its either you sign those papers or not.

      J-Man - 2012-02-10 10:33

      It has been looked at, discussed, researched etc etc...they said no, it will destabilize the country, too expensive for SA to buy out the mines, NOT A VIABLE OPTION AND NOT ANC POLICY....Don't you understand that?

  • ditantane.kganakga - 2012-02-10 10:20

    not a policy now but will be @ Mangaung

      J-Man - 2012-02-10 10:30

      I want to see you or ONE of your fellow pro-nationalization mates to explain to me EXACTLY what this means, and how it would affect SA, its people and most of all, its economy.... So go on...explain to me, i dare you..you clueless sheep.

  • Uknowimrite - 2012-02-10 10:44

    well now that malema is out we can bank on the ANC not seeing his somewhat ridiculous ideas through. even IF this nationalisation of mines was a solid deal, the ANC would have crushed just because it was malema vision. i don't care how the light shone through, but i'm glad it is there.

  • kgalalelo.malesele - 2012-02-10 16:17

    avoiding this issue wont take us anywhere instead we are increasing the load everytime we shy away from talking and finding ways possible to nationalization. whether we like it or not somehow mines will have to be looked at very very very very closely

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