'Read my lips, nationalisation doesn't work'
Governments in mineral-rich countries must steer clear of the “blind alleys” of nationalisation and excessive tax if they want to attract continued investment from global miners, Anglo American chief executive Cynthia Carroll said on Thursday.
Speaking at an industry dinner, Carroll called on the industry to speak out over issues that risk hobbling development for producer countries and for the sector.
“Governments tempted to move in this direction convince themselves that necessary mining investments in their countries will continue unabated, despite the imposition of such arbitrary changes,” she said.
“They are wrong. International businesses have choices to make between investment opportunities in different jurisdictions.”
She said miners would be attracted instead to countries with “stable and fair” fiscal regimes.
Nationalisation of mining assets was also unlikely to foster development, she said. Empowerment policies have badly damaged Zimbabwe’s mining industry and have created uncertainty in South Africa, Anglo’s main market, where nationalisation is backed by some in the African National Congress and its youth league, but is officially condemned.
“I say it again and I urge all of you to join me in saying it—nationalisation does not work,” she said.
Resource nationalism in producer countries, whether it is the urge to demand a larger share of mineral wealth via company ownership or through taxes, has become a growing problem for the industry as governments face tight budgets in the aftermath of the financial crisis, while commodity prices boom.
Carroll referred to Australia’s carbon pricing proposals which she said would place “unacceptable burdens” on the industry and damage Australia both as an investment destination and as an exporter.
Carroll also said that despite short-term risks, the medium-term outlook for growth and commodity demand was “very strong”.
“We are still much closer to the beginning than the end of the developing world growth story.” - Reuters