Nationalisation of the mines is a cry that goes echoing down South Africa’s history. For this country is built on its mines — even today, they account for a good half of exports, let alone foreign exchange, for this is perhaps the most fabulously endowed nation on the planet. Gold, diamonds, platinum, copper, coal, rhodium — you name it, South Africa’s got it.
Before 1948, the Afrikaner nationalists swore they would nationalise the mines. But once they won power, the demand dropped away. For the fact is that the mining companies have dug the world’s deepest and most sophisticated mines. Their investment is somewhere between R1,2-trillion and R2-trillion. Their expertise in engineering, organisation, marketing and the profitable management of these assets through a hundred years of wars, depressions and wild commodity price swings is awesome.
Anyone who thinks of taking all this over can be forgiven for baulking. For a start, where would one find the money to buy them? Anything less than full compensation would start a panic among the foreign investors on whom South Africa depends.
And where would one find the necessary human skills to run and manage them? And the prodigious sums required to sink new shafts?
Africa’s recent history is littered with disastrous mining nationalisations. Governments quickly found that running mines was beyond them — state bureaucracy in Africa being the world’s most corrupt and inefficient — and that the political imperative of maintaining employment prevented them from making the necessary cutbacks when prices fell. The result was to turn profitable private mines into disastrous public loss-makers. The result, almost everywhere, has been re-privatisation. After all, a mine is just a hole in the ground — no one can take it away. What the state really wants is a steady tax income from profitable mines and to allow someone else to supply the capital and expertise and carry the can for the ups and downs of the employment market.
The white communists who crafted the ANC’s freedom charter in 1955 were careful to insert a clause that would justify mine nationalisation and this remained a standard ANC demand until 1990 — the party was frozen in the attitudes of the 1950s by decades of prison and exile. But Mandela quickly found that international economic opinion was so overwhelmingly hostile to nationalisation that he dropped this commitment. Under Mbeki it was decided that the way ahead was via black economic empowerment (BEE), which created a number of black mining moguls and ambitious targets for the further spread of mining assets to the black middle class.
Now, however, Julius Malema, the intemperate leader of the ANC Youth League, and Castro Ngobese of the Young Communists have renewed the call for nationalisation. Officially, the ANC has said that it welcomes a debate on the subject but Susan Shabangu, the minister for minerals, has quickly insisted that nationalisation is “a non-issue” and will definitely not happen. President Jacob Zuma has said nothing. Shabangu doubtless has it in mind that there is a desperate need for new mining investment, which has fared badly thanks to BEE legislation. Until now the markets have also treated Malema’s demand as a non-event: were they to take it seriously, there would be a massive flight of capital and a rand collapse.
But this is dangerous ground. Zuma came to power full of leftwing promise, yet the sad reality is that unemployment is rising and the plight of the poor is worsening. In the resulting climate of disappointment and frustration there is considerable scope for the sort of raw populism that Malema projects, particularly since the market’s fall means that most BEE moguls are now in financial trouble and would welcome a state bale-out. Malema is not one for finesse.
When it is pointed out to him that virtually all state industries are badly-run loss-makers and that there isn’t even enough black talent to staff the civil service, let alone the mines, he simply says that the state has it in its power to do whatever it wishes.
Similarly, he assumes that all mining assets will be expropriated without compensation but that investors will nonetheless keep investing. In a country like South Africa, with large numbers of poor and ill-educated people, such economic illiteracy is not necessarily a disqualification.
The situation is extremely fragile. As yet the markets have not tested the Zuma presidency, allowing Zuma to remain all things to all men — including his rag, tag and bobtail coalition of the left.
But how long will the markets hold off? If things start to slide, as they might, Zuma will come under enormous pressure to nail his colours to the mast — which will in turn destabilise his coalition. The majority that voted Zuma in at Polokwane was united by hatred of Mbeki. With Mbeki gone, so is the glue and it is unclear whether Zuma has sufficient personal following to counter that fact. – guardian.co.uk