South Africa plans to complete by the end of the year a study on how to use its vast mineral wealth to fight widespread poverty and this will figure into the ruling ANC’s policy discussions on nationalisation, said a top ANC official.
ANC Secretary General Gwede Mantashe also tried to dispel investor concerns the government wants a complete takeover of the mining sector — a plan backed by the party’s Youth League and seen by analysts as bankrupting Africa’s largest economy.
“The fact that there are rich deposits of minerals in the country but there is poverty, is an ill that must be worrying all of us,” Mantashe told a news briefing, Reuters reports.
The African National Congress has set up a research team to visit 13 countries to look at their experience in mining and what they did with resource wealth.
The team, which has visited seven countries so far, is expected to complete its report by the end of the year. It will then be used at an ANC policy-setting meeting in late 2012.
“When we take a decision, we will take a decision that says: ‘What they did in Botswana and what they did in Brazil will work for us.’ We don’t take decisions on the basis on emotion,” Mantashe said.
Among the areas under study are the diamond mining joint venture between Botswana and giant De Beers, Australia’s mine taxation regime and the public-private mix in Chile, he said.
The ANC has avoided making any decision on nationalisation for years at its major meetings. Even if it discusses options in 2012, it will likely postpone a decision until at least its next major meeting in 2015, if it follows the pattern.
The debate on nationalisation is likely to fade somewhat with its most outspoken proponent, ANC Youth League leader Julius Malema, facing charges from his own party that could derail his political career.
But nationalisation will likely remain a political topic for years because the country’s poor sees it as a way to extract riches from the land, which would help them escape poverty.
The bill for taking over all South African mining firms would be enormous. The market capitalisation of listed mining companies in South Africa is equal to about two-thirds of GDP, or twice the annual national budget.
Threats to tweak laws in order to expropriate shares for a fraction of their value would run up against international investment guarantees and that would almost certainly trigger severe backlashes from South Africa’s trading partners.
Senior ANC officials have warned that the debate is damaging the country’s reputation. Talk of a mining takeover has undermined confidence in a sector that accounts for 6 percent of GDP and tarnished South Africa’s image as a promising emerging market investment destination.