Data provided by McGregor BFA
All data is delayed
Loading...
See More

Why nationalisation won't work

Sep 28 2012 16:14

Related Articles

Shabangu: Nationalisation bad for mining

ANC rejects 'wholesale nationalisation'

Malema: We mean business

ANC says no to nationalisation

Shabangu reassures foreign investors

A case for nationalisation

 
MyFin24 is a user-generated section of Fin24.com. The stories here come from users.

Fin24 blogger Sashan writes that once nationalised, mines chase away all the skills required to build the mines effectively.

He refers to an opinion piece - Nationalization and Mining: Lessons from Zambia - Daniel Limpitla wrote about a year ago, saying it is most relevant because "whilst the debate around nationalisation of the mining sector in South Africa is not front and centre of the conversation, it is always 'trending' beneath the surface".

Why is it still relevant? Because not only does the author point out how production falls, but he also points out how expensive it is to revitalise the sector once a long period of underdevelopment and underinvestment has passed.

Back to the present, he blogs: “Whilst some fellow who seems to capture all of our imagination was appearing in court up the drag in Polokwane, the markets were taking a serious drubbing here.

“Again, with all the unrest in the local mining industry, the local miners led the way south again. Gold miners lost over four percent, the platinum stocks collectively got thumped three and two thirds of a percent. I saw another analyst report on one of the majors suggesting that it was a conviction sell.

"Yuck.... “OK, not all of the blame can be pointed at the local miners and the unrest for having a negative impact on our markets since last Monday or so. Much of the finger pointing can be in the direction of the Spanish government dragging their heels. Or at least that is what Mr. Market thinks.”

Fast forward to nationalization and Daniel, and Sashan writes: “But the key to the piece that Daniel has written is that once nationalised, mines chase away all the skills required to build the mines effectively. Why? Well, here are some reasons, an excerpt from the piece:

'Mining is a high risk, capital intensive industry that requires access to large numbers of highly skilled people, most of whom are motivated by personal gain.

‘There are very few examples of efficiently run state-owned mines that make a positive contribution to their country’s economy, the copper operations of Chile’s Codelco being the exception. Chile’s success in running nationalised mines is in no small part due to the fact that Chilean mining schools have historically produced more than double South Africa’s number of mining engineering graduates.
'“These Spanish-speaking engineers are also less mobile than South African graduates in the English language dominated world of mining.'

"If you remove the personal incentives for the stakeholders, productivity falls. Without a doubt. And then another telling half a paragraph should seriously be governments mantra on this issue, putting to rest the debate once and for all.

'Removal of the risk/reward profit motive will accelerate the current flight of skills to other mining locations—already the Australians pay a substantial premium over local salaries for mining engineers.

‘This will leave South Africa unskilled, uncompetitive, and begging for international buyers for the now rundown mines, with nothing but ruined assets to sell'.”

If the shortish piece written by Daniel is the only other thing that you read today, do it, suggests Sasha.

  - Fin24

Disclaimer: All articles and letters published on MyFin24 have been independently written by members of the Fin24 community. The views of users published on Fin24 are therefore their own and do not necessarily represent those of Fin24.

Fin24 reserves the right to obtain service providers' comments before publishing any articles or letters. Fin24 editors also reserve the right to edit or delete any and all user comments received.

Any money woes and joys you'd like to share with fellow Fin24 readers? Send your stories to editor@fin24.com and you could get published.

Or if you have a pressing financial question, post it on our Money Clinic section and we will get an expert to answer your query.

*For more on Fin24 stories, check out our Facebook, Twitter and Google+ pages.


 
nationalisation  |  mining unrest
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
1 comment
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're Talking About: Small Business

Standard Bank is looking for 12 entrepreneurs to participate in a 10-part TV series. They could win a R1m investment into their dream.
 
 

Numsa prepares for life after Cosatu

Numsa has not only reiterated its call for President Jacob Zuma to resign but it is also preparing for life outside of Cosatu, a report states.

 
 

Latest elections multimedia

Why Jack Parow wants you to vote on 7 May
The ad the SABC doesn't want to air
Elections 2014 in one cartoon
This year's election posters

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...