Here is a link to the statement by the ANC on why the mines of South Africa should be nationalized. This is a discussion document prepared for the ANC Youth League at their planned League National Council Meeting on 23 to 27 August.
It is anybody’s guess whether the Youth League will prevail this time against the older members of the ANC. But I predict that in time the young will prevail–they are yet to grow old and even more greedy–and the old will die leaving the field clear for the young.
This document is long and badly reasoned. But that is not the issue. The argument that the mines should be nationalized is founded on the ANC Freedom Charter, that idea that the mines were the basis of most discrimination in the old days, and that the mineral wealth of the country belongs to all and should be used for school, etc.
In practice, as happens everywhere, the money from nationalized mines will flow to Malema and his greedy cronies. The document recognizes this danger when it states:
81. The State capacity to manage enterprises is doubted, often in comparison to the State’s oversight or lack thereof of key State owned enterprises such as the South African Airways (SAA), ESKOM, SABC and Denel. The comparison is not fair because in most instances, these have failed due to sheer criminality, mismanagement and patronage which characterised the most of these entities and very weak accountability systems. The capacity of the State to decisively intervene in SAA and ESKOM for instance was inhibited by lack of proper systems and legislative framework concerning the extent of interventions the State can make alongside Boards of Directors.
Somehow, in the case of the mines a system will be set up to avoid “sheer criminailty, mismanagement and patronage.” If you believe that!
Compare this open admission of past government failure to the fundamental justification for nationalization:
46. The government revenue that is generated from taxes will not be able to build better lives for all South Africans. Government cannot solely rely on taxes to deliver better services to majority of our people. South African will not be able to deal with the housing backlog, free education access, better healthcare, safety and security, employment of particularly youth if we are not in control of the key and strategic sectors of the South African economy. The wealth of South Africa should benefit all who live in it.
Then the document makes reference to the success of Botswana in “owning” the greater share of the mines in that country. Here are a few paragraphs to give you a feel for the flow of argument:
47. Botswana case study presents a case on why nationalisation of strategic minerals can benefit the South African State. In Botswana, the State is in a 50% each partnership with De Beers in a mining joint venture called Debswana Diamond Company Ltd. Debswana was formed as the De Beers Botswana Mining Company on June 23, 1969, after De Beers geologists identified diamond-bearing deposits at Orapa in the 1960s. Over the next five years, the government of Botswana increased its ownership stake from an original 15% to a full 50%. In 1991, the company changed names to Debswana Diamond Company Ltd and moved its headquarters to Gaborone.
48. Diamond mining activities have fuelled much of the growth in Botswana’s economy, allowing it to grow from one of the poorest countries in the world when it became independent in 1966 to a “middle income” nation, with $9,200 per capita income in 2004[30]. Largely because of this, Botswana is considered by two major investment services to be the safest credit risk in Africa. Diamonds account for fully one third of the nation’s GDP, over 90% of earnings from exports, and 50% of government revenues. Debswana is the largest non-government employer in the country, employing approximately 6,300 people, of whom over 93% are Botswana citizens. Debswana is also the largest earner of foreign currency.
49. Despite the 50% government ownership and control, Debswana pays tax and royalties to the Botswana government. The Botswana government utilises the revenue generated from diamond mining to finance its socio-economic development, particularly the education of Botswana students in and outside the country. Whilst characterised by various other control and management weaknesses, the Botswana model of ownership and benefiting from its mineral resources is an important lesson, which should be considered in South Africa’s transfer of minerals wealth to the ownership of the people as a whole.
50. In South Africa, De Beers complies to the MPRDA provisions of 30% of its shares and control being controlled by historically disadvantaged individuals. The weakness with South Africa’s share model is that it benefits few individuals instead of large communities and the people as a whole. Whilst the intention to integrate historically disadvantaged individuals into mining is noble, it should not be pursued at the expense of the entire population and communities. The principle should forever be people sharing in the country’s wealth. How such should be realised will be explained in detail below.
And so the document continues. The reality is that all the logic in the world (or illogic if you will) will play little part in an emotional issue where the youth are in charge–or will be in due course. Regardless of what you may think of the claims of the rich blacks, now empowered by sixteen years in power, and regardless of what you may think of honest arguments that all the taxes in the world will not solve South Africa’s unemployment problems, the issue for us oldies is simply, do you care to invest in this unstable situation? My simple advice is to divest yourself of all your share in South African mines, mining companies, or other entities that will inevitably fall prey to this nationalization wave. There are simply some places where it is not worth investing.
