June 30 (Bloomberg) -- South Africa’s government would earn more from the nation’s mining industry by regulating it rather than owning operations, Business Leadership Chairman Bobby Godsell and Chief Executive Officer Michael Spicer said.
Africa’s biggest economy should follow the example of China, Brazil, Russia and Zambia and move away from state ownership of the industry, Spicer and Godsell, the former CEO of AngloGold Ashanti Ltd., the continent’s biggest gold miner, wrote in an opinion piece in Johannesburg-based Business Day today.
The African National Congress agreed in September to study nationalization to meet demands from Julius Malema, head of its youth arm. Mine operators in South Africa are compelled by law to sell 26 percent of their assets to black investors by 2014 and boost numbers of black managers to help make up for discrimination during apartheid before 1994. Some companies missed targets for 2009, the mines minister said at the time, adding that the industry had “not lived up to the spirit and intent” of the law.
“If foreign owners were not compensated, foreign governments including China, India, Russia and Brazil, in addition to foreign investors, would be likely to invoke international treaties,” they wrote. “South Africa’s membership of BRICS would immediately be in jeopardy and South Africa would move from a respected member of the international community to a similar pariah status to that it held during apartheid.”
Companies forced the debate by failing to offer sufficient stakes to black investors, or to develop workers and communities around mines, Sandile Nogxina, the outgoing director-general of the Department of Mineral Resources, told Business Day yesterday.
Mining generates 30 percent of South Africa’s export revenue, 18 percent of its corporate taxes and 500,000 direct jobs, according to the Mines Ministry. The country is the world’s biggest producer of platinum and chrome, and the third- largest gold producer.
South Africa, with more than $2.5 trillion in mineral reserves, is the world’s richest nation by “commodity wealth,” followed by Russia and Australia, Citigroup Inc. said in April last year.
Mining companies comprise 1.9 trillion rand ($280.4 billion), or 43 percent of the value of South Africa’s stock exchange, Godsell and Spicer said.
“Why would anyone want to spend 1.9 trillion rand in state resources when the benefits of the expenditures, downstream beneficiation and employment are already substantially created by the mining sector in South Africa,” they wrote. “The cost- benefit analysis of nationalization just does not make economic sense.”
#<735117.6325188.8.131.52.23378.96># -0- Jun/30/2011 05:33 GMT undefined
-0- Jun/30/2011 05:47 GMT undefined --Editors: Gordon Bell, Paul Richardson
To contact the reporter on this story: Ana Monteiro in Johannesburg at firstname.lastname@example.org
To contact the editor responsible for this story: Antony Sguazzin at email@example.com