Lex: Nationalisation of South African mines
“Calls for the nationalisation of South Africa’s mines by Julius Malema, recently re-elected leader of the ruling African National Congress’s Youth League, are raising concerns in the industry. Lex’s Edward Hadas and Richard Stovin-Bradford discuss the threat, and whether mine nationalisation is good for the nation.”
Source: FT: Lex – video, June 29 2011
- Julius Malema, a leader of the Youth League of the ANC, has been calling for nationalisation of South African mines to increase control over resources and make the country benefit more from the earth’s riches.
- Though not set up to facilitate nationalisation, this year’s launch of a state mining company (AEMFC) is seen by many industry experts as a threat to a free mining market in the country.
- An internal power struggle in the ANC party could take long before any moves for nationalization would be taken. However, due to the long horizon of mining projects investors will certainly take this risk in account when looking at South African opportunities.
- A potential compromise demanded by the ANC to satisfy the demands for more mining benefits for the South African people would be a royalty or tax increase. This would prevent a take-over of control of mining assets by inexperienced and overloaded government institutions, while transferring a larger portion of mining profits to the population.
©2011 | Wilfred Visser | thebusinessofmining.com