June 14 (Bloomberg) -- South Africa’s African National Congress will probably reject a proposal by its youth wing to nationalize the country’s mines after the ruling party concludes a study next quarter, said Peter Attard Montalto, an economist at Nomura Plc.
The ANC may call instead for “greater distribution of mining wealth and of ownership, together with a more rapid expansion of the state-owned mining company,” Montalto wrote in an e-mailed note today.
ANC Youth League leader Julius Malema has lobbied the ruling party to impose rules to ensure that the state owns at least 60 percent of all the country’s mining assets. The ANC agreed in September to investigate ways of increasing state control in mining, including reviewing the Youth League’s proposal. That study will be debated at the ANC’s policy conference in 2012.
South Africa is the world’s biggest producer of platinum, chrome, manganese and vanadium, Africa’s largest producer of gold and the biggest source of coal for European power plants.
“The review was set up simply to kill off the debate on the left about mine nationalization and there has already been a full commitment that nationalization isn’t government policy,” Montalto said.
Political and policy risks are rising in South Africa as the government moves to wider budget deficits, Montalto said.
South African Finance Minister Pravin Gordhan said in his budget speech in February that the government will trim the fiscal deficit at a slower pace than previously forecast. The shortfall is expected to reach 5.3 percent of gross domestic product in the year through March, compared with the 4.6 percent predicted in October.
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