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.