Address by Ms Susan Shabangu, Minister of Mineral Resources of South Africa, at the business breakfast organised by The New Age Newspaper: Sandton Sun, Gauteng province, August 2 2011

Bruce Whitfield,
The publishers of The New Age,
The Editor and staff of the newspaper,
The leadership of the Chamber of Mines
Invited guests,
Ladies and gentlemen,

Thank you very much for inviting me to address this occasion- your first business breakfast - on the challenging topic of the nationalization of our country's mines.

There is a hive of activity in our country with regard to this issue of the nationalization of our mines. Yesterday, my colleague, Minister Gigaba, spoke on the subject which shows remarkable interest and vibrancy. This has included even those who do not understand what it means and what its implications are.

It is public knowledge that the ANC has appointed a team of researchers following the decision of the National General Council to look comprehensively into this matter and present the movement with a report that will take into account comparative international and African experience respectively.

The quality of debate leaves much to be desired

Peter Drucker, the world-renowned management guru, states: "The most serious mistakes are not being made as a result of wrong answers. The truly dangerous thing is asking the wrong question."

This very approach is endorsed by Tim Hurson who, in his book, Think Better, asks almost the same question: "How often have you come up with a ‘great solution' that, when applied, didn't really change anything which (effectively) amounts to a great, answer but from a wrong question!"

Imagine analysing the South African "evil triplets of poverty, inequality and unemployment" - and coming to the conclusion that the reason why these persist is because the mines are not nationalized; or that the only way these can be eliminated is through privatization. Are these two ideological positions going to help South Africa address the material conditions of the people living under the spell of these evil triplets?

Are we really governing to pursue purist ideological objectives or are we governing to adopt the most practical and pragmatic solutions to the evil triplets already referred to? If there is one thing we, who are members of the oldest liberation movement on the continent, can pride ourselves on it is that we dropped some of these ideological extremes long before it became fashionable to do so.

It seems to me that this is exactly the very same approach that guided the founding fathers of the Freedom Charter even right at the very height of the cold war.

We have accepted this invitation to discuss these urgent matters for two reasons: first, to deal with negative perceptions that have arisen out of this debate and to debunk them; and, second, to respond to the call for alternatives by the very forces in the Congress movement who, in the first place, made this call.

Impatience of young people caused by their economic conditions

In order to understand why we have to deal with impatient young people who are calling for economic freedom in their lifetime, we need to look no further than the recently released diagnostic report of the National Planning Commission. It was an eye-opener.

It demonstrated, for instance, that only 41% of "economically active" South Africans are employed compared with over 60% in countries such as Malaysia and Brazil , or 70% to 80% in China, Colombia or Thailand - and that even a sizeable proportion of those who are employed in our country are in the informal sector of the economy. Put differently, a large proportion of our employed struggle within a survivalist type of occupation.

These figures are staggering when it comes to young people: About two thirds of the unemployed are young people below the age of 35. This figure includes graduates who either cannot find employment or who are placed in peripheral roles when they eventually find jobs in the mining industry.

It is with this picture in mind that the report of the National Planning Commission concludes with these words "This time bomb (i.e. youth unemployment) is the greatest risk to social stability in SA."

There you have it, ladies and gentlemen. It should come as no surprise that the youth are impatient. What do we expect when our economy cannot absorb them into the labour market?So should we all be impatient. But then, as Lenin said; what is to be done?

It is my considered opinion that we should first ask the correct question in order to find the correct answer. The correct question should not be whether or not we nationalize. The question, in my view, should be: How do we make use of our vast mineral wealth to eliminate the evil triplets to which we have referred? Is this perhaps not a more productive debate than that in which we are currently engaged?

It is well and good for all of us to engage in this intellectual debate on whether or not to nationalize. But to the extent that this does not address the evil triplets, it is then a fruitless exercise. Those in the congress movement who are calling for nationalization argue that mines should be nationalized to: increase the State's fiscal capacity and better working conditions; industrialise and create more jobs; safeguard South Africa's sovereignty; transform the accumulation path in the South African economy; as well as to transform South Africa's unequal spatial development patterns.

Unfortunately and disappointingly, the response from the private sector and certain commentators to these calls is as follows: if the mines are nationalised "we will go all the way to the Constitutional Court"; foreign investors will not invest in South Africa; nationalization is a bad idea; nationalization has failed elsewhere, learn from Zambia; the State cannot run mines, look at Alexcor; as well as: let's have an Economic CODESA.

In all the articles I have read, no one has asked these questions: "How do we increase the State's fiscal capacity whilst simultaneously improving working conditions of miners? How do we as a country, contribute to the twin objectives of industrialization and the creation of more jobs? Should we rather not be grappling with the beneficiation strategy that was recently approved by cabinet so as to ensure its success?

So have we perhaps not reached a stage where we are talking past each other and not with one another? Are we perhaps ideological, rigid and full of threats in our participation in this raging debate? It is my considered view that the industry is engaged in a wrong debate? We should rather find answers to the question" How can we eliminate the evil triplets?

As the Minister responsible for mining I can only give the private sector one word of advice: Please change the tone and content of your response; address the issues raised. Do not attack the messenger or allow the texture of your response to degenerate into personal and personality battles. Equally, the same approach should be adopted by those in the Congress movement who are championing the opposite cause.

I will not venture my private opinion on this matter as Professor Ben Turok does in his book Development in a Divided Country - Understanding the ANC Today. Instead ,like many other members of the ANC, I am looking forward to engaging with the internal processes of the ANC in order precisely to answer the kind of questions that Professor Turok has asked in his book. I am aware that this may disappoint those in the audience who came here to hear my own views on whether or not we should nationalize our mines.

This matter is a policy matter which we will answer, as the ANC, first in the policy conference and later in Mangaung at the end of next year. I am aware that the investors, and equally members and supporters of the ANC who want to see investments and jobs in the mining industry, will be disappointed because they want clarity and certainty.And they also want as many people as possible to enjoy the same privileges that employed people take for granted.

However, it is important to highlight the point that our country has paid heavily for its democratic dispensation. In democracies, citizens, groups, and institutions have the right to raise issues, to demand public debates, and engage in peaceful and orderly discourses that at times might be uncomfortable for some and unsettling for others. This principle is critical for the sustainability of our new dispensation.

Autocratic societies are efficient in concluding or suppressing debates.But more often than not they simply "kick the can down the road", deepening dissent, often at huge cost to society.As a member of the Cabinet, I am ever mindful of the need to abide by government policy whilst at the same time deepening our constitutional democracy even if this means no quick fixes and no rapid termination of uncertain processes. I submit that this is one of the central balancing acts that we as South Africans have to cultivate, with patience.

SA's economic system

South Africa does not have either a capitalist or a socialist or even a communist economic system. Ever since the days of the Freedom Charter we have always stood for a mixed economy where the state and the private sector will have space to contribute. The ANC is very clear and unambiguous about its desire to create a developmental state. In this regard we have every intention to ensure that this developmental state continues to play a role in strategic economic sectors to facilitate economic growth and economic diversification. As a government we have adopted the New Growth Path whose framework we are busy implementing.

However, over the past two years, we have taken a decision to consolidate all our mining assets into one entity, the African Exploration Mining, Finance Corporation (AEMFC). We are in the process of hiving off AEMFC from the Central Energy Fund so that it can become an independently operating entity. The first major project of AMEF that was launched by HE Mr Jacob Zuma early this year is now producing coal and IS already supplying ESKOM. It will do this whilst continuing to build on the example of entities such as the Industrial Development Corporation (IDC), including the National Empowerment Fund (NEF) and others.

The regulatory framework

In 1994, it was in the Reconstruction and Development Programme and, in 1998, in the White Paper on Minerals and Mining Policy in South Africa; there, both the ANC and the Government decided that minerals wealth would be exploited for the benefit of all South Africans.

It is in the context of this policy position that the Minerals and Petroleum Resources Development Act (MPRDA) enjoins all holders of mining rights to "contribute towards the socio-economic development of the area where they are operating". The Social and Labour Plan read together with the Mining Charter are radical measures that we have taken to give practical effect to the objectives outlined in various policies and decisions of both the ANC and government.

Gone are the days when the mining contribution is measured only by its contribution to the gross domestic product (GDP), or royalties that it pays to the fiscus. We need to ask the question what exactly is the direct impact of GDP growth or royalties (paid to the fiscus) on a specific community located in the proximity of mines. How do they feel about abstract concepts called GDP or royalties? Communities expect mining companies to become engines of socio-economic development of their areas.

We need to ask ourselves whether the abject failure of some mining companies to implement even the most mundane requirements of the original, let alone revised, mining charter did not, perhaps, serve as fertile ground giving impetus to the current debate about nationalization. This matter is not being helped by the news of massive increases in operating profits of mining companies when, in some provinces, disputes between communities and mining companies are being exacerbated by the failure to finalise governance structures.

The result of this is that in some provinces, an amount of about R500 million cannot be accessed to improve the living conditions of people who are residing in these mining areas.

Two weeks ago we also issued a section 93 notice effectively suspending operations of one mining company that failed to implement social and labour plans in the province of Limpopo since it promised to do so three years ago. The mining industry should make sure that the social labour plans (SLPs) become the exception rather than the norm. It is these cases that are undermining the work of the mining industry in our communities.I want to restate my position that the courts cannot fundamentally resolve all the disputes between the mining companies and the communities. This can only be done if all parties work together to find a solution.

We need to ask ourselves whether this industry has implemented fundamentally the agreements of the 1993 meeting between the ANC and the Chamber of Mines- and subsequently those of the Mbulwa meeting of 2001.There, labour, business and we (as government) recognised that increased access to mineral resources and "(the) security of tenure" were at the centre of our attempt to create shared growth. This was a decade-long process characterised by tortuous negotiations and ultimately compromise from disparate positions that were taken by various players in the mining industry.

Have we implemented the MPRDA's injunction to achieve "substantial and meaningful expansion" for previously disadvantaged South Africans to enter the mining industry and to "profit from the exploitation of the nation's mineral and petroleum resources?"

Despite all these failings, and all said and done, I am encouraged by the spirit of working together that has characterised the mining industry since the days of the recent financial crisis.We have created an inclusive stakeholder forum called the Mining Industry Growth and Development Task Team (MIGDETT). MIGDETT has been a shining example in our quest to create a mining jurisdiction that enjoys the confidence of all the players in this industry.

We cannot deal properly with the debate merely by writing op-eds in the public media, with some players sometimes taking cheap shots at the ANC and sections of the congress movement.

Let us resist the temptation to take ideological positions on bread and butter issues. The down trodden or the wretched of the earth, as the great liberation philosopher Franz Fanon calls them, require us to assist them to improve the quality of their lives; they have not accepted our leadership so that we could sit here to debate whether or not to nationalise the mines. This debate is not taking our people anywhere.

Let us engage in a dynamic process of implementing the radical proposals that we have agreed upon since the dawn of democracy. In doing so we will be instilling hope and in helping young people to attain economic freedom in their lifetime

Let's make a start in this great dialogue in the nation's best interests! It is within our reach! It is possible!

 I thank you!

Issued by the Department of Mineral Resources, August 2 2011

Click here to sign up to receive our free daily headline email newsletter