(Updates with minister’s comments starting in second paragraph.)
Aug. 1 (Bloomberg) -- South Africa’s ruling party debate over nationalizing the country’s mines is deterring investment, said Public Enterprises Minister Malusi Gigaba, who oversees state-owned companies such as Eskom Holdings SOC Ltd.
“We know the harm this acrimonious and reckless debate is doing to investments and the image of the country,” Gigaba told the American Chamber of Commerce in South Africa in Johannesburg today. It affects “not just investments in mining, but investments generally.”
Julius Malema, the 30-year-old leader of the governing African National Congress’s Youth League, has championed calls for nationalization of mines in the world’s biggest producer of platinum and chrome to redistribute wealth to black South Africans. The ANC appointed a panel to investigate the proposals and issue a report that is expected to be discussed at the ANC’s June policy meeting and voted on at the leadership conference in December 2012.
“We don’t have the resources, the management capability, the technical know-how to run the mines,” Gigaba said in an interview after his speech. “We will have a major dip in terms of the public image of the country. The ANC will take a rational decision on this issue.”
The ANC’s panel is studying various options to address concerns that communities located near mines aren’t benefiting from the operations, he said. The government is also setting up a mining company to help meet its goals to boost jobs and economic growth, he said.
South Africa is the continent’s largest producer of gold, supplies European and Indian power plants with coal and depends on mining for half of exports. In April 2010, Citigroup Inc. valued the country’s mineral resources at $2.5 trillion, the most of any nation.
Eskom burns more than 100 million metric tons of coal a year, with much of the fuel supplied by companies including Anglo American Plc and Exxaro Resources Plc.
Foreign investors voiced their concern to Gigaba during a recent investment roadshow that he attended in London with Transnet SOC Ltd., the state-owned rail company that is spending 110 billion rand ($16.5 billion) over the next five years to expand capacity.
“It’s necessary to assure investors that whilst the debate is going on, the purpose is not to be divisive,” Gigaba said.
--Editors: Karl Maier, Antony Sguazzin
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