ANC YL's POSITION ON THE NATIONALISATION OF MINES
The ANC YL decided to release preliminary notes on nationalisation so as to properly guide the discussion and debate currently happening in the public discourse. Lots of confusion was generated in the minds of some amongst those who responded to our call. Here we publish our preliminary thoughts around nationalisation, and request further inputs from the patriotic South Africans and any other person who cares about the development of our people. The notes clarify the misconceptions and will assist our discussion of modalities towards nationalisation of Mines.
ON NATIONALISATION OF MINES -PERSPECTIVE
The year 2009 marks exactly 10 years of Susan George's presentation to the Conference on Economic Sovereignty in a Globalising World, titled "A short history of neo-liberalism". During the Conference, Susan George made profound observations, including the fact that:
"the ideological and promotional work of the right (neo-liberals) has been absolutely brilliant. They have spent hundreds of millions of dollars, but the result has been worth every penny to them because they have made neo-liberalism seem as if it were the natural and normal condition of humankind. No matter how many disasters of all kinds the neo-liberal system has created, no matter what financial crises it may engender, no matter how many losers and outcasts it may create, it is still made to seem inevitable, like an act of God, the only possible economic and social order available to us" (George, 1999).
This observation rings very true in South Africa's public discourse, particularly when judging the reactions of mainstream media and some in government to the ANC Youth League's call for nationalisation of Mines, i.e. State ownership and control of the extraction, production, processing, and trade of mineral wealth in South Africa. Instead of closely examining the ANC YL's call, most commentators rushed in where angels fear to tread and feebly labelled the ANC YL various despicable things, which should not be repeated on this measured intervention, because it seeks to clarify the ground-breaking Youth League's perspective.
Various newspapers' editorials attempted to deflect the attention from the essence raised around nationalisation of Mines, but such should not weaken our focus towards attainment of the Freedom Charter objectives. For instance, the Sunday Times' editorial on the nationalisation of Mines is part of the reactionary, but an extremely weak and sad attempt to deflect the attention from what is genuinely raised by the ANC YL on the nationalisation of Mines. The frail argument the Sunday Times gives in opposition to the call for nationalisation is drowned in the ranting and conspiracies that precedes the paper's argument. We nevertheless should engage the newspaper's ideological disposition, and totally reject, or perhaps ignore the lame accusations and conspiracies touted before their weak argument against nationalisation.
Our response here will try to cover all the issues raised by various role players, including Spokespeople of investors, and commentators inside and outside South Africa. It is useful that we mention here that this response is an extract from the broader perspective which the ANC YL will use to engage with all stakeholders. The ANC's official position is that the debate on nationalisation is open, so we expect measured contributions and critiques from various quarters, and hopefully, those will not be overcharged with attempts question our bona fides.
Conceptual Basis
Before we consider the question of nationalising mines in particular, it will be important to begin by outline our understanding of nationalisation in general:
Firstly, we proceed from the understanding that nationalisation is not be-all of economic transformation. In other words, having nationalised key parts of the economy does not automatically mean that indeed the wealth is in the hands of the people and that the people will benefit from such wealth. Nationalisation is not a panacea for South Africa's developmental challenges, but it should in the manner we are proposing it, entail democratising the commanding heights of the economy, to ensure they are not legally owned by the state, but that they are thoroughly democratised and controlled by the people - their workplaces, their management, and decision-making process.
Secondly, nationalisation should be accompanied by thorough transformation of state-owned enterprises. Much of the existing state-owned enterprises have much to be democratised and transforming such that they indeed benefit the people as a whole. In this context, the model of nationalised enterprises that are command-driven is not attractive to us as does the existing SOEs corporatist models which tend to operate on similar values and principles of a private company.
Thirdly, nationalisation should help build strategic capacity of the state to unlock resources for development and growth path that is more inclusive and equitable. The strategic capacity of the state through public ownership enables the state to lead other sectors to achieve these broader societal goals. So as the ANCYL we are not talking of generalised nationalisation, even of industries that are of no strategic importance. The most strategic industries, tends out to be largely monopoly industries, but it is debatable if public ownership should be limited to this sector. For example, the state may take a lead through public ownership, research and development in industries that have yet to mature.
Fourthly, nationalisation, like its opposite, privatisation, can assume various forms: it can be 100% public ownership, or 51% or more owned by the state, or established through partnership arrangements with the private sector in which the state assume greater control.
Finally, depending of the merits of the each case based on "balance of evidence", nationalisation may involve expropriation with or without compensation.
The Freedom Charter
The ANC YL's call for nationalisation is premised on the reality that the ANC's strategic goal is towards attainment of the Freedom Charter's aims and objectives. The Freedom Charter says that "the people shall share in the country's wealth", and in order to realise this, "the mineral wealth beneath the soil, banks and monopoly industries shall be transferred to the ownership of the people as a whole", whilst "other trade and industry are controlled for the benefit of all". This is not equivocal, and has practical relevance in South Africa's current economic conjecture of a dependent economic development. Dependent in the sense that we are mainly producers of natural resources, without any substantial capacity or effort to beneficiate those, so our continued production of natural resources is totally dependent on the demands of markets elsewhere. Such subjects us to economic problems whenever there are fluctuations in the markets that consume our primary commodities.
There are those who misunderstand the intentions of the Freedom Charter because they either have class interests and prejudices or they genuinely have not paid detailed attention to both the context and content of the Freedom Charter. The Charter premises its call for transfer of ownership to the people as a whole by affirming a clarion call that "The people shall share in the country's wealth". The transfer of ownership to the people as a whole is therefore meant to ensure that all people equitably benefit from the extraction, processing, beneficiation and trade of mineral wealth beneath the soil. Linked to this, the Charter says that "And all other trade and industry shall be controlled for the benefit of all". There is neither nuance nor contradiction in these assertions, and the ANC YL's call for the State to own, control, extract, process, beneficiate and trade mineral wealth on behalf of the people is within proper context.
Former ANC President Oliver Tambo said in the 1969 political report to the National Consultative Conference that, "At the moment there are vast monopolies whose existence affects the livelihood of large numbers of our people and whose ownership is in the hands of Europeans only. It is necessary for monopolies which vitally affect the social wellbeing of our people such as the mines, the sugar and wine industry to be transferred to public ownership so that they can be used to uplift the life of all the people". In his first public address after release from prison, former President Nelson Mandela said, "nationalization of the mines, banks and monopoly industry is the policy of the ANC and a change or modification of our view in this regard is inconceivable". Both Oliver Tambo and Nelson Mandela played critical role in the consultation for the Freedom Charter and adoption by the ANC, and they could not be mistaken. There are of course tactical retreats made in the process, which require a separate discussion to understand.
A contradictory view which suggests that State's control of mineral rights and renting to big corporations for exploitation is attainment of the Freedom Charter is very regressive, and not dissimilar to the view that suggest that we should retain the status quo. It is total dishonesty to suggest that the people will share from private control, ownership, processing and trade of South Africa's mineral wealth. If the status quo is retained, it will continue to be few corporations (black and white) that benefit out of multinationals control of South Africa's mineral resources. A view that suggests that the "transfer to the ownership of the people as a whole", means that only mineral rights should be transferred to the State is equally disingenuous. On Economic Transformation, he 2007 ANC 52ND National Conference resolutions are premised on the view that "Our (ANC's) vision of the economic transformation takes as its starting point the Freedom Charter's clarion call that the People Shall Share in the Country's Wealth". So there is nothing wrong with the call for nationalisation of Mines in line with the 52nd National Conference resolutions.
Labour-absorption
Our call for nationalisation is based on the Freedom Charter, but also on the fact that such will enhance and harness the State's capacity to create jobs and open economic opportunities for majority of our people. The State control, ownership and expansion of our mineral processing and beneficiation will play a critical role in labour-absorption of many other workers into the South African economy. Buttressed by a comprehensive social security strategy, South Africa needs high labour-intensive programmes to decisively deal with the unemployment and poverty challenges. The ANC's 52nd National Conference resolutions re-affirm that "the use of natural resources of which the state is the custodian on behalf of the people, including our minerals, water, 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". This requires resolute leadership and decisive intervention into South Africa strategic economic sectors.
One of South Africa's greatest challenges is its high levels of unemployment. Added to the low skills reality, the South African economy is not sufficiently labour-absorptive to the extent that even if the entire workforce would be skilled, the economy would not absolve all workers into decent employment. So the creation of various labour absorptive job opportunities is vital to deal with the unemployment and poverty challenge. Mining as a critical component of the South African economy should necessarily be used to expand and industrialise the South African economy in a more developmental, instead of parasitic mechanism pursued by the current owners of Mining activities in SA.
Economic Sovereignty
Whilst relatively developed, South Africa's economy continues to be largely dependent on the basis that it relies heavily on the extraction and exporting of natural resources and importing of finished and consumer goods and services. For sustainable and durable economic development, South Africa's primary commodities, i.e. minerals, metals, iron ore, agricultural products, and energy, have to be demanded by markets outside our control. This squarely explains the decline of our production and retrenchments in mines due to the financial crisis which fundamentally affected the bigger economies, and not of our own making.
For durability, South Africa needs to expand internal capacity to extract, process, beneficiate and utilise the economic commodities that constitute the strategic core of the South African economy. It can never be correct that whenever we speak about economic development, we constantly need to make assurances to forces beyond our control, elsewhere in the virtual global market that certain things will not change. Such is a sign of economic dependence, which has a great potential to undermine South Africa's political and social independence, autonomy and consequently stability.
The State's control and ownership of Mines will amount to direct developmental investment into South Africa's economy and significantly variant from the typical "Foreign Direct Investments", which Susan George correctly argues "are not devoted to new, job creating investment but to Mergers and Acquisitions which almost invariably result in job losses". South Africa is home vital minerals reserves in world, and this includes Platinum Group Metals (70%), Gold (40%), Manganese (70%), Chromium (70%) and 54 other minerals. Such advantage can never be subjected to the whims and directives of few investors elsewhere at the expense of local economic development.
This however does not entail that South Africa should not enter into strategic partnerships with established Mining corporations. The kind of partnerships which can be considered in the immediate could include but not limited to State control of majority shares in all big mining corporations, whilst allowing the Small and Medium mining houses to privately extract and trade minerals. Botswana and Namibia present useful archetypes on how South Africa can approach and practicalise this consideration.
Most reactionary and counter-nationalisation writers base their rejection of our call on the possible cost of nationalisation to the South African economy. They employ the cost as a scare tactic meant to frighten the ANC YL into thinking that nationalisation will cripple the South African economy. Disgracefully, that is done before a closer examination of what the ANC YL says on the approach to nationalisation. It is our considered view that the MPRDA is a correct foundation for the State to move towards control and ownership of minerals in South Africa. The private mining corporations do not own Minerals; they own the machinery and technologies that are used to extract minerals. Minerals are owned by the State on behalf of the people of South Africa, and the State has a responsibility to ensure that the people benefit out of these minerals and other natural endowments. The State's intervention into mining should not disrupt the current mining activities, but should change ownership, and therefore beneficiaries of South Africa's mineral wealth.
State Capacity
The State capacity to manage enterprises is doubted, often in comparison to the State's oversight of 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.
In the management of vital resources such as minerals and Mines, there will certainly arise a need for strong accountability systems and legislative guidelines of how Mines are operated, buttressed by strong public accountability mechanisms. With the lessons derived from SAA, ESKOM, DENEL, and countries that are in Minerals extraction partnerships, South Africa is suitably located to could propose a more effective, efficient and durable mechanism, systems and legislative framework to manage Mines more efficiently. So the failed cases of SAA and ESKOM should not serve as a discouragement to the State's control and ownership of Mines, but as a lesson of what should be done moving forward.
Most of the Black Economic Empowerment (BEE) beneficiaries of The Minerals and Petroleum Resources Development Act and various Mining Charters are neither mining experts, nor engineers. An absolute majority of Mines' shareholders are not mining experts and engineers, and some do not even know where the actual mining is happening. What shareholders do is put in place proper systems for the running of mines, yet is the biggest beneficiaries of mining in South Africa. The South African post democratic administration is maturing and could be able to own mines and utilise the existent skills and capacity to ensure that as many people as possible benefit from mining activities. Majority of South Africa's mining engineers are produced by South Africa's institutions of higher learning.
There is sufficient capacity amongst people who are currently running Mines to operate Mines on behalf of the State. Nationalisation does not mean that the people currently operating private Mining activities will be demolished; it instead means that ownership will change. With the State as a major shareholder, then the proceeds of Mineral wealth will be directed towards development of Mining communities and contribute to the national budget for other useful expenditures such as education, health, rural development and beneficiation of these minerals.
Conclusion
When ANC YL President Julius Malema made the call for nationalisation of Mines, he further said that "we are aware the implementation of the Freedom Charter will not please everyone, but our responsibility and obligation is to please the majority of our people, so we should not be worried that there will be problems when the Freedom Charter is implemented". This is definite, because in a class divided society like South Africa, it is impossible to reconcile economic interests of various classes, with some strata falling victim to what Susan George refers to as "the ideological and promotional work of the right".
References: George, S, A Short History of Neo-liberalism, Conference on Economic Sovereignty in a Globalising World, march 24-26, 1999.
Issued by the ANC Youth League, July 15 2009
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