The nature of state intervention in South Africa’s mineral assets will be debated at next week’s ANC policy conference in Midrand.
The ANC has released a discussion document — “Maximising the developmental impact of the people’s mineral assets: state intervention in the minerals sector” — known as Sims.
Sims is based on an extensive study commissioned by the ANC to discover how best to leverage South Africa’s mineral wealth to grow the economy and create more jobs.
“The Sims study noted that whilst SA was exceptionally rich in minerals the crucial mineral economic linkages were not being maximised, and that the state was not receiving an equitable share of the resource rents,” Jeff Radebe, head of the ANC national executive committee policy subcommittee, said at the launch of the discussion documents in March.
According to the document, the minerals sector must be placed at the heart of the national development strategy, as it is South Africa’s only natural resource sector that can be regarded as exceptional in global terms.
This would require better co-ordination between government departments.
The document suggests merging the departments of mineral resources, trade and industry, energy, public enterprises, economic development and science and technology to form a super economic ministry.
Improving maths and science education was essential, as no country studied by the research team had successfully developed its minerals base without significant investment in technical knowledge, research and development.
The study found that nationalisation of mineral assets was not affordable as it would cost just over R1 trillion to acquire a 100 percent stake in all listed and non-listed mining companies.
“This exceeds the entire government budget, which is expected to exceed R1 trillion for the first time in 2012/13.”
Nationalisation without compensation — as called for by the National Union of Metalworkers of SA and the ANC Youth League — would require a change to the Constitution and would result in a near collapse of foreign investment and access to finance.
“This route would clearly be an unmitigated economic disaster for our country and our people.”
Instead, the study proposes state control through the introduction of a 50 percent resource rent tax, or a super tax, which kicks in only when an investor has made a reasonable return, so as not to deter investors.
Resource rents refer to surplus revenues after the payment of all exploration, development, and extraction costs.
“So they are exceptional profits embodied in the people’s mineral assets and consequently should be shared between the people and the mining company.”
The document proposes that resource rents be ploughed back into social and economic development.
The State Minerals Company, which has already been decided on, should be tasked with creating better access to strategic minerals, such as iron ore, coal and copper, to supply to the domestic market at competitive prices.
At the moment, key minerals are supplied to the local market at exploitative prices, which hinder growth and job creation.
Beneficiation of minerals is vital to ensure jobs are created in sectors such as manufacturing, energy, infrastructure and agriculture.
A presidential mineral rights audit commission should be established to carry out a forensic audit on the granting of all new order mining rights and, if improperly awarded, these should be suspended.
The ANC will meet in Midrand for four days, starting on Tuesday, to discuss 13 policy documents ahead of its national conference in December.
The policy decisions made at the policy conference will then be discussed and finalised at the national conference in Mangaung, Free State, in December.
These policies will form the basis for the ANC government’s policies, new laws or amended laws.