South Africa minister: Mines won’t be nationalised

JOHANNESBURG —Nationalisation is not an option for South Africa’s troubled mining industry, the country’s mining minister told an international audience yesterday, earning praise from those who advise potential investors. A nationalisation debate within mining minister Susan Shabangu’s governing African National Congress is said to have made foreign investors wary, depriving a key industry of capital. According to the text of her speech opening an international meeting on the mining industry in Cape Town, Shabangu said a report by an ANC task team concluded “that nationalization is not a viable policy for South Africa.” “This is not a surprise,” added Shabangu, who has at times appeared frustrated that her repeated pronouncements against nationalisation have been drowned out by other ANC figures who have less influence on policy. Nationalisation has been pushed in particular by Julius Malema, the vocal and populist leader of the ANC’s youth league.

Malema’s profile has been diminishing, in part because of accusations linking him to corruption in the awarding of government contracts for building roads and other projects in his native Limpopo, a northern South African province. And over the weekend, ANC officials affirmed a party disciplinary committee’s early finding that Malema is guilty of serious violations, including challenging President Jacob Zuma’s leadership. He will get a chance to argue against a five-year suspension. Alison Turner, an analyst with Panmure Gordon & Co, said that for some time, “I’ve been fairly outspoken in saying the nationalisation threat is real and investors should be cognizant of that.” Turner, who heard Shabangu’s speech in Cape Town, said she was reassured not only that the ANC had drawn conclusions against nationalisation, but that Malema appears to have been sidelined.

“I think the immediate threat of nationalisation has receded,” Turner said, though she added concerns remained about whether new taxes and restrictions might be imposed on mining investment. Manus Booysen, a mining specialist at the major South African law firm of Webber Wentzel, also raised concerns about taxes, but welcomed the minister’s assurances on nationalisation. “The nationalisation debate is a major issue for mining investment and it is a concern raised by investors worldwide,” Booysen said in a statement. In an e-mail to AP, Lesiba Seshoka, spokesman for South Africa’s National Union of Mineworkers, said his union had always believed the mining sector was too expensive to be taken over by the state. But he said the state must be a majority partner with private companies in mining strategic minerals.

Shabangu also said in her speech mine owners could have avoided the nationalisation debate if they had done more to ensure the black majority had a chance to invest in and run mines. “That’s a fair criticism,” said analyst Turner, saying mining companies had not kept all the promises they had made regarding what is known in South Africa as black empowerment. South African officials have repeatedly expressed concern the country’s mining industry is underperforming, stealing momentum from Africa’s biggest economy. Observers blame crumbling infrastructure, mismanagement and the specter of nationalisation. “Certainty over property rights is critical to attract long-term investment,” Trevor Manuel, South Africa’s respected former finance minister who is now a top aide to the president, said Monday, addressing the same group to which Shabangu spoke on the eve of the official opening of the mining conference.

Manuel said uncertainty over nationalisation along with other questions about how mining rights are determined need to be resolved “speedily because if we fail to do so, we will continue to lose out from higher global demand.” In a report released Monday, the country’s Industrial Development Corporation said South Africa was lagging behind other countries in getting key minerals out of the ground. Jorge Maia, head of research for the corporation, called for “significantly higher levels of investment, supported by major improvements in the energy and transportation infrastructure.”

AP