[miningmx.com] — THERE’S a very odd exchange of semantics underway in this whole nationalisation debate in which we’re all being exhorted to participate. I just wonder what international investors make of it?
In Business Day earlier this week, AngloGold Ashanti CEO Mark Cutifani attempts to parlay the ANC Youth League’s policy position on nationalisation into a more general discussion about options regarding economic transformation. Cutifani does this, I think, in order to infuse the “polarising’ nationalisation debate with civility and clarity. But while I’m all for not shouting, some arguments are worth raising a voice for, especially when you’re telling the ANC Youth League where to get off.
Says Cutifani: “Surely nationalisation cannot mean what it might be taken literally to mean: the acquisition by the state, with or without compensation, of all the country’s mining assets?’
But isn’t that exactly what’s being proposed? I’m not aware of the ANC Youth League having modified its position on the matter. It quite simplistically wants state control of the country’s mines without compensation. Surely that’s a rubbish idea and should be declared as such?
It’s true that, as Cutifani states, that legislation has already vested the country’s mineral rights with the state which is why mining firms effectively pay half-yearly rent on 20 and 30-year leases as directed by the Royalty Act. Yet for the sake of international investors, the guys who have a world of investment options (literally) at their fingertips, the South African mining industry needs to be firm on rejecting nationalisation. And seen to be doing so.
International capital is what helps make the mining sector tick. Right now, the mere threat of nationalisation, the discussion we’re all being asked to embrace, is part of a witches’ brew called “the South African discount’, and it sits along with other things international capital and debt markets worry about: restive labour, labour costs, a strong rand, silicosis (for the gold sector at least) and energy costs.
I just believe trying to meet the pro-nationalisation voices half way is at best, an overly genteel response; at worst, it’s avoidance. It reminds me of the reluctance that also prevents the mining sector from speaking out against state departmental abuses in respect of mining licences for fear of private retribution.
First things first: the mining sector needs to stop genuflecting to political debates and light a ring of sacred fire around its assets, especially as far as the threat of nationalisation is concerned. They’re too precious not to take an aggressive position.
