JOHANNESBURG- Long-running investor concerns about whether South Africa might nationalise its mines will be laid to rest at a ruling party conference later this month, the country’s mines minister said on Tuesday.
Over two years of support for nationalisation from radical elements in the ruling African National Congress (ANC) unnerved investors and has been seen as a key reason why the sector has not attracted the foreign capital it should.
But an ANC study released in February said nationalisation would be an “unmitigated disaster”. Instead, it urged higher taxes and royalties which the sector could find hard to absorb as it struggles with soaring labour and power costs.
“There has been much speculation as to what the ultimate result of the discussions of the ANC will be on the issue of nationalization,” mines minister Susan Shabangu said in a speech at a Johannesburg business school.
“This will be laid to rest in two weeks time,” she said, referring to the ANC’s policy conference starting on June 26.
Shabangu has already signaled her iron-clad opposition to nationalising mines in the world’s largest platinum producer as has President Jacob Zuma, while supporters of nationalisation have been weakened.
The face of the nationalisation drive, former ANC Youth League leader Julius Malema, has been suspended from the ruling party for bringing it into disrepute, killing any influence the young radical may have had over policy.
Shabangu also said her department commissioned a report on the state of the platinum sector three months ago and that the completed study is now on her desk.
This comes as the sector grapples with depressed prices and escalating costs which have pushed marginal operations into the red, as well as violent labour strife and a government safety drive which hit production hard in 2011 and earlier this year.
Aquarius Platinum this week became the first major platinum producer to scale back activities because of low prices and will likely not be the last.
Shabangu said the platinum sector is so important to the South African economy, Africa’s biggest, that it cannot be allowed to decline.
“We must look at ways to ensure production grows, not declines,” she said.