Shabangu tells ANC to drop nationalisation

[miningmx.com] — MINING Minister Susan Shabangu has warned the ANC
to axe nationalisation at its Mangaung conference if it wants to save the economy.

The high-level meeting took place at the same time as the country was hit by another
international vote of no confidence in the economy.

Standard & Poor’s (S&P) downgraded South Africa’s credit rating by one notch on
Friday, saying the continuing mining strikes and growing “social tension’ would
“increase spending pressure and reduce the country’s fiscal flexibility’.

The downgrade follows the move by Moody’s, which last month cut the country’s credit
rating and also downgraded the top-five banks over concerns about the government’s
ability to solve economic problems.

A financial analyst has warned that South Africa was moving closer to “non-investor’
status.

“The negative outlook reflects our view that the medium-term political, economic and
fiscal ramifications of South Africa’s social tensions could deteriorate beyond our
current expectations,’ S&P said on Friday.

Although not naming nationalisation, the ratings agency suggests the ANC’s future
policy frameworks will likely be influenced by the mining strikes.

“We see an increased likelihood that the ANC will take on board more populist
elements for its policy framework in the lead-up to the 2014 presidential elections,’
S&P said.

Former ANC Youth League leader Julius Malema’s calls for the nationalisation of mines
have enjoyed wide support from striking mine workers.

Shabangu, meanwhile, has been travelling the world in the wake of the Marikana
massacre to allay fears about this and other violent wildcat mining strikes and to
restore investor confidence in South Africa.

After attending Friday night’s meeting, Shabangu told City Press that
investors were not only concerned about the ongoing mining strikes, but were “jittery’
about the issue of nationalisation and in particular the fact that strikes were spilling
over to gold, coal and other sectors of the economy.

While the ANC rejected the issue of wholesale nationalisation at its midyear policy
conference, the party deferred the final decision to nationalise “strategic assets’ to
Mangaung.

“The biggest issue when it comes to policy issues is whether Mangaung will nationalise
(mines). We’ve dealt with that issue, but (investors) continue to raise it,’ Shabangu
said. “We are confident that when we come out of Mangaung, we will be able to put
this matter aside and it will bring and instil much more investor confidence.’

Independent financial analyst Ian Cruickshanks said South Africa was “no longer the
shining example of a well-managed democracy on the continent’.

The downgrade moved the country a step closer to “non-investor’ status and would
defer potential investors from investing any further money in the country, he warned.

“The likely outcome is that the rand will weaken more, everything we import will cost
more and you’ll have to pay more for it, including a barrel of oil,’ said Cruickshanks.

On Friday night, Zuma called on business and labour to work together to find solutions
“so that we can revert to the primary task at hand to build the country, build the
economy and improve the quality of life’.

He was “seriously concerned’ about the violent nature of recent strikes and said
labour disputes “do not need to degenerate into violent confrontations’.

Shabangu said investor confidence was low as a result of the strikes. “The most
difficult thing for everybody who invests is you invest with the intention of having
returns and that’s the key issue that has dampened the spirit of the investors.

“One of the biggest challenges for investors was the protracted strikes. It has been a
cause for concern because it’s not a once-off; it is sort of spiralling in the mining
industry. It was platinum, then gold, then coal. So indeed, it is a cause for concern.
These are some of the issues they were concerned about.’

She said Friday’s meeting was a step in the right direction to restore investor
confidence.

“It’s not going to be easy. It’s going to be very difficult for us, but I am confident that
the first step we are taking is right.

“We also have a responsibility to assure investors that what has occurred will not
happen again and. that when they come into South Africa, their money is protected.’

Cosatu general secretary Zwelinzima Vavi confirmed that the meeting discussed the
S&P and Moody’s downgrades.

He praised Zuma for showing leadership in convening an urgent meeting to rescue the
economy.

“If anything, the statement says to the country that there is leadership and that
leadership is concerned about the state of affairs,’ Vavi said.

He expressed relief that the meeting, which lasted for more than three hours,
condemned the violent strikes and urged law enforcement agencies to curb the illegal
action.

Another meeting will take place on Wednesday, where the country’s final response to
the impending economic crisis will be announced.

National Union of Mineworkers general secretary Frans Baleni, who attended the
meeting, said they also discussed the high remuneration of mining bosses.

“We know that ratings agencies react on the basis of perceptions, not facts. The
important thing is that the leaders of South Africa should send positive messages, not
negative signals,’ he said.

Baleni added: “If we don’t do anything and things continue as they are, we could find
ourselves in a recession. Therefore, it requires that it shouldn’t be business as usual.’

AngloGold Ashanti chief executive Mike Cutifani confirmed discussing the issue of
executive pay at the meeting.

“We said we will go back and raise those messages with our constituency. It’s too
early to talk about what it means,’ he said.

He said the investment downgrade was a serious matter, saying matters such as
unprotected strikes were major issues for investors. “If we allow the current situation
to continue, thousands of jobs will be lost.’

– City Press