/ 21 September 2010

The case for the nationalisation of mineral resources

Transferring control of the country’s mineral resources to the state is one of the hot topics at the ANC’s national general council

  • The case AGAINST nationalisation is argued by SA Communist Party deputy secretary general Jeremy Cronin
  • In December 2007, at its 52nd national conference in Polokwane, the ANC declared that “our vision of economic transformation takes as its starting point the Freedom Charter’s clarion call that the people shall share in the country’s wealth”. The conference further emphasised the need for usage of “natural resources of which the state is the custodian on behalf of the people, including our minerals, water [and] marine resources, in a manner that promotes the sustainability and development of local communities and also realises the economic and social needs of the whole nation, not for profit maximisation”.

    From September 20 to 25 the ANC’s third national general council (NGC) will be meeting in KwaZulu-Natal, home of Chief Albert Luthuli, who was ANC president when the Freedom Charter was adopted. Among other things, the NGC will review and discuss how the ANC is actualising the charter’s call for the people to share in the country’s wealth. The NGC should certainly ask itself why natural resources are perpetually used for profit maximisation at the expense of communities, even after a clear determination was made to end this practice.

    The ANC Youth League will join more than 2 000 delegates from across the country, representing branches of the ANC, to ask how far we have progressed with concrete programmes to realise the Freedom Charter’s objectives to combat high levels of unemployment, poverty, starvation and hopelessness that exist alongside South Africa’s mineral wealth.

    The question of the nationalisation of mines will arise out of these deliberations. All activists and members of the ANC signed a declaration upon joining the party that “we will abide by the aims of the Freedom Charter”. As a mechanism to address the crisis levels of unemployment and poverty, the youth league, and now ANC branches, regions and provinces, will at the NGC call for the nationalisation of mines — not as an end in itself, but as a means to ensure the state’s budget is increased to meet social needs such as quality education, healthcare, housing and infrastructure development.

    In Venezuela the nationalised oil company, Petroleum de Venezuela (PDVSA), accounts for 32% of GDP, 50% of government revenue and 80% of export revenue. The revenue generated is used to fund social-development programmes, particularly free, quality education for all. In Chile, between 1991 and 2003, the 10 largest foreign companies paid $164-million a year towards such programmes, but state-owned copper-miner Codelco paid $764-million a year — almost five times more.

    These are practical examples that inspire our call for the creation of a state-owned mining company, which will do real business in all profitable mining activities, particularly in coal, iron ore and the platinum-group metals, to guide and direct labour-absorbing industrial developments.

    Greater state control and ownership of mines should be located within a developmental mining sector strategy, which will clearly outline the country’s need to preserve natural resources in an environmentally friendly and sustainable fashion. The state’s industrial-policy framework should be aligned with its minerals strategy to ensure that “our national resource endowments, including land, water, minerals and marine resources, are exploited to maximise effectively the growth, development and employment potential embedded in such national assets, and not purely for profit maximisation”, as resolved at Polokwane.

    To achieve this the state should reclaim all mining rights, which the Minerals and Petroleum Resources Development Act (MPRDA) says belong to the people of South Africa as a whole and give total control of these rights to the state-owned mining company. This company will then issue licences on the basis that the state will own, control and benefit from not less than 60% of all the country’s profitable mining activities and operations.

    The remaining maximum of 40% would go to private corporations, subject to the provisions of the mining charter, with payment of taxes and royalties, plus effective social-labour arrangements that respond to the developmental imperatives of mining communities.

    Nationalised mines will also open a space for the development of new economic centres and the establishment of multiple concurrent industrial development zones, which will reinforce the existing economic centres while developing local economies and absorbing many of our unemployed.

    Nationalisation has many other economic benefits, including the safeguarding of South Africa’s economic sovereignty and shedding the colonial legacy of being an exporter of natural resources and an importer of finished goods and services.

    South Africa is politically decolonised, but the colonial features of its economy are still vivid. It is the responsibility of the ANC to address this fundamental question through the social and economic emancipation of the black majority and Africans in particular.

    The NGC should reach concrete resolutions on the following key issues:

    • The Freedom Charter remains the strategic objective of the ANC and entire national liberation movement;
    • The ANC’s correct interpretation of the wealth clause includes a commitment to nationalise South Africa’s mines, banks and monopoly industries;
    • A state-owned mining company should be established using the existing state interests in mining as a nucleus for the company and this should happen before the ANC’s 53rd national conference in 2012;
    • An ANC minerals strategy should be developed to concretise the Freedom Charter’s vision concurrent with the establishment of a state-owned mining company;
    • A moratorium should be declared on the issuing of all prospecting and mining rights until a minerals strategy is developed and adopted by the government;
    • The MPRDA should be amended to reclaim all prospecting and mining rights given to private corporations and then reissue them based on the following conditions: the state-owned mining company should have a minimum of 60% of ownership and control of all mining operations; not less than 50% of minerals extracted should be locally beneficiated and industrialised; all mining activities should be accompanied by thorough social-labour plans and community development strategies, developed in consultation with stakeholders; and there should be clear environmental-impact analyses of all mining activities; and

    The process of adopting an Expropriation Act should be expedited and constitutional limitations on the noble objectives of redistribution should be democratically removed through the amendment of Section 25 of the Constitution.

    These guidelines will ensure that the ANC has a clear direction on the management of natural resources, as directed by the Polokwane conference. The mining charter transformation results, recently released by the minister of mineral resources, reveal two fundamental weaknesses in the sector charter’s approach to transformation and redress. The reality is that the so-called transformation charters are useless because they cannot be and are not enforced in instances of non-compliance.

    Also, the realities of South Africa’s mining sector and minerals industry pose the question of whether the country and government have a determined political and strategic leadership on the management and redistribution of natural resources.

    Once the resolution on the nationalisation of mines is taken, a necessary question should be asked as to whether those who are tasked with leading the management and redistribution of mineral resources at government level are up to the task. This is not a petty diversion: in all revolutions and fundamental strategic shifts, subjective elements have the potential to undermine strategic missions and the ANC cannot be blind to these realities.

    There might be differences on some of the modalities presented by the youth league, yet there should never be disagreement on the centrality of the Freedom Charter as a guide to the strategic objectives of the ANC.

    The nationalisation of South Africa’s mines, which is ANC policy as articulated in the Freedom Charter, should inspire all delegates to the NGC when discussing and ultimately adopting the best model for carrying out this policy.

    Nyiko Floyd Shivambu is the spokesperson of the ANC Youth League