POLITICS

Freedom of SA mining industry crucial - Solidarity

Union says certainty over property rights a cornerstone of prosperous societies

Although the report by the ANC commission investigating government intervention in the minerals sector dismisses the notion of full-scale nationalisation and President Zuma, according to media reports, declared on Friday morning that "nationalisation is not the ANC or government policy", there is no reason for complacency, trade union Solidarity today warned.

The trade union is concerned that nationalisation is being substituted for a "mixed economy", as the President put it, which is unfortunately in line with the trade union's prediction in a study undertaken last year that, at least in name and for the time being, nationalisation would be rejected. The trade union will release a report on the value of South Africa's private mining industry on Thursday.

According to Piet le Roux, senior economics researcher at the Solidarity Research Institute (SRI), Zuma's dismissal of nationalisation in favour of a so-called "mixed economy" is cause for concern about the future of the mining industry.

"Certainty about property rights is a cornerstone of a peaceful and prosperous society. What the President has in mind with a mixed economy undermines property rights and, therefore, poses a real threat to the prosperity of almost all South Africans.

"The present notion of a mixed economy is probably inspired by the growth achieved in recent times by former communist countries such as China, a growth that was seemingly state led. We are, however, concerned that the ANC and the President believe that such growth must be attributed to state intervention, while the improvement in those countries is actually the result of a decline in state intervention following their introduction of significant free market reforms from the late 1970s onwards."

According to Le Roux, it is not surprising that, in its draft report, the ANC commission tasked with investigating state intervention in the minerals sector (SIMS) rejects outright nationalisation.

"This policy position offers no grounds for complacency, however. The underlying interventionist thinking, which led to the call for nationalisation - and the current call for a so-called mixed economy ‒ is still as entrenched as ever in the ANC. Indeed, the SIMS commission finds, as we predicted, that nationalisation is but one instrument by which the ANC can achieve its goals.

Moreover, as even the SIMS report acknowledges, mineral resources have already been nationalised by virtue of the Mineral and Petroleum Resources Development Act of 2002. This offers the necessary leverage in terms of which wide-ranging state intervention in the mining industry can and does occur. The proposed merging of BBBEE, state and trade union ownership into a single so-called "special purpose vehicle", with a minimum joint holding of 30% of voting shares in mining companies by BBBEE and state shareholders, is indicative of such stepped-up state intervention, and is cause for concern."

During the past six months, the SRI has undertaken two studies on the issue of nationalisation. The first, entitled Building on no foundation - the logical incoherence of nationalisation and its interventionism, has already been submitted to the relevant ANC commission last year. (Click here to read the report.)

In that study, it was predicted that the ANC commission was likely to reject nationalisation, but would, instead, recommend something not essentially different.

"While the SIMS commission appears likely to end up not recommending nationalisation, it cannot - given its terms of reference which call for interventionist proposals - present objections to nationalisation other than those based on technicalities. While such objections may subsequently be heeded by the ANC, it seems likely that nationalisation will only be rejected in favour of something not essentially different. In this respect, the commission's research programme is indeed aptly named the State Intervention in the Minerals Sector Project", the report states.

The SRI also cautioned against the ANC commission's superficial, technical approach to the investigation, which passed over fundamental questions about the essence of their project.:

"To jump straight to technical questions would be to risk endless discussions about various kinds of nationalisation - whether or not [a specific kind of nationalisation] has positive results - instead of asking whether interventionism (of which nationalisation is but one example) can hold its ground as a durable answer to whatever problems are experienced in society. Such a debate (on the various kinds of nationalisation) would not address the ANCYL or Solidarity's concerns and would not give the ANC greater clarity on some of the most fundamental questions about the nature of society and whether and how its observed characteristics can be influenced."

According to Gideon du Plessis, Solidarity's Deputy General Secretary, this study should be an important point of reference in the debate on nationalisation and state intervention in the South African economy.

In a second study, to be released by the SRI on Thursday, 16 February, the institute focuses on the private mining industry's benefits to employees, shareholders and consumers.

"In times when talk of nationalisation is commonplace, and when the owners of capital are often casually denounced, it is not uncommon to come across highly negative treatments of the mining industry. Exposure to these sentiments might create the impression that the mining industry benefits only a few, already rich owners, and that for the rest it is responsible for too few jobs, inequality, ecological ruin, an undermining of community vitality and any number of other ills.

"But such a one-sided and often inaccurate treatment obscures the modernising and wealth-creating effects of an industry on which much of our modern standard of living rests. Because Solidarity believes that relations between employers in the mining sector and mine workers can be mutually beneficial, the Solidarity Research Institute undertook a brief study to serve as a reminder of the benefits of the mining industry."

The first study is available on the website www.navorsing.co.za and the second will also be available from 16 February.

Statement issued by Piet le Roux, Senior economics researcher: Solidarity Research Institute, February 15 2012

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