Comments by the Chief Executive of the Chamber of Mines, Mzolisi (Zoli) Diliza on the nationalisation of mines

The Chamber of Mines and its members are encouraged by the statement issued this morning by the Minister in the Presidency, Mr Trevor Manuel, which questions the logic of calls to nationalise the country’s mines.  Minister Manuel correctly draws attention to the prohibitive costs of nationalisation and places doubt on the legitimacy of using taxpayers’ money to fund the acquisition of mines.

The Chamber and its members are emphatically opposed to the nationalisation of the country’s mines. Nationalisation is an antiquated and universally discredited political practice that will have disastrous consequences for the national economy.

Nationalisation has not worked in any country in the world and neither will it work in South Africa. History is littered with numerous examples, several of them in Africa, of how nationalisation has impoverished countries. If nationalised, South Africa could be seen as a pariah by the global investment community. Investment flows into the country would be substantially diminished, inhibiting economic growth, reducing employment opportunities and exacerbating already unacceptable levels of poverty.

Zambia’s nationalisation of its copper mining industry in 1972, is just one African example of the debilitating effects of nationalisation. Within two decades of the government taking ownership of its copper mines, Zambia’s levels of copper production plunged to less than half the pre-nationalisation level.  In recent times, the Zambian government has invited the private sector to once again take over the country’s copper mines and the industry is now flourishing. The Zambian experience is enlightening and it is incomprehensible how the authors of the Kio Advisory Services Report - released earlier this week - could have concluded that what transpired in Zambia presents good reason for our government to nationalise South Africa’s mines. Such illogical reasoning raises questions about the motives of both the authors and the sponsors of this research.        

We are very pleased with  the mature and pragmatic approach taken by the ANC on this important topic. This issue, with its potentially damaging impact on the national economy and the livelihoods of hundreds of thousands of South Africans,  has for far too long been discussed without proper research to determine its true impact. Minister Manuel’s observation that the true nature of nationalisation of the mines needs to be examined over the next two years by the ANC’s National Executive Committee (NEC), is a particularly significant commitment that is welcomed by the Chamber. The industry, as represented by the Chamber, will participate constructively in the debate that takes place.

In examining the modalities and options open for the mining sector, the Chamber urges the ANC to look closely at the demands of meaningful transformation of the mining sector so that the likelihood of the success of transformed entities is enhanced. The research conducted by the NEC should aim to identify cases where attempts are being made to have the State bail out failed enterprises at taxpayers’ expense. While the Chamber and its members are truly committed to the transformation of the industry, it is imperative that the beneficiaries of transformation fully understand that they are entering into business transactions in which they will have to share risks in the same manner that they enjoy rewards. It is not acceptable practice to take profits, but to externalise your liabilities to the taxpayer.

For any enquiries related to this media statement please contact:

Jabu Maphalala
Deputy Communications Adviser
Chamber of Mines of South Africa
Tel No.  +27 11 498 7212
Fax No. + 27 86 524 6619
Cell No. + 27 71 679 2770