Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
After years of debate, South Africa’s ruling party African National Congress rejected Thursday plans to nationalize the country’s mining sector, but voted in favour of higher taxes in the world’s main producer of platinum and chrome.
“The issue of nationalization as we’ve discussed it during the past few months is off the table. The ANC affirms its historical position on this topic – strategic ownership where deemed necessary,” said Malusi Gigaba, the public enterprises minister, as quoted by The Africa Report.
The party removed any reference to expropriation in its policy recommendations and promised a bigger role for a state-controlled mining company.
According to The Globe and Mail, South African authorities have frequently expressed opposition to nationalization, but the matter stayed on the agenda for years “because the ANC did not take an official stand, and the supporters of nationalization have remained vocal and active.”
Earlier this year, ANC’s national executive committee commissioned a report exploring the issue of nationalization and what it would mean for the country.
The researchers proposed a 50% tax on all “super profits” from mining companies and a reduction of royalties from 4% to 1% .
The country’s mining sector, which accounts for 6% of gross domestic product, was repeatedly hit this year by disputes over low wages that reflect widespread anger over enduring inequalities.
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