Here is a radio interview that was not conducted with me this morning:

Why would the ANCYL want the state to grab 60 percent of an ailing mining industry?

Because Julius wants everyone to be able to afford a R250 000.00 Breitling like the one on  his wrist …

oops sorry, wrong piece of paper … here’s the right one:

Because some corporate finance wide boy has worked out a way to salvage a slew of BEE deals that are under water; deals that were premised on the continuation of the commodities super-cycle into the far and distant future.

How will nationalisation help?

The ANCYL are proposing suspending the issuing of licences; they want the state to set up a mining company and they want the state to nationalise 60% of each existing and all new mining operations …

Yes, but how would that help BEE mining deals?

You think this government would not pay compensation, proper market related compensation, if it came to take 60 percent of  mines belonging to Tokyo, Patrice, Cyril, and Mzi … and Saki and a few others? They will pay, trust me on this.

So you think it is just a scam?

… no, not only a scam. Nationalisation is a traditional badge of radicalism. In an environment  where the majority of South Africans have not benefited much from liberation it is politic for an organisation like the Youth League to assume the posture of heroically trying to take the wealth back from the greedy mine owners and give it to the people.

But isn’t it a fact that the mining houses make huge amounts of money and pay workers poorly and feed nothing back into the communities they work in?

Hmm, yes that is mostly true, but the big multinationals have learned to be on their best behaviour: environmentally friendly, money to local communities, good safety records …. the way to get the most out of being endowed with minerals is make those requirements as stringent as the productivity margins on any one operation allow. So charge royalties and tax them and require a whole range of social goals be fulfilled ….

But isn’t that what the 2002 Mineral and Petroleum Resources Development Act does?

Exactly. That act set up the Mining Charter and was based on a brutal and honest exchange between government and all the big investors in our mining sector … remember the leaked draft of the Mining Charter, the huge sell-off, the (then) Minister of the (then) Department of  Minerals and Energy rushing around the world’s financial centres explaining government’s intentions with regard to the  proposed Act and the BEE process … then the long struggle to set the level of royalties …. this is a process that we have been through …

But surely government can change its mind, and say: no we want more from the sector?

Of course it can – and investors have always treated that as a risk; they would have preferred a clause somewhere promising set levels of BEE ownership and unchangeable targets for the various aspects of the codes. Investors hate governments shifting the goal-posts. But this proposal is a lot more than shifting the goalposts. Nationalisation along the lines the Youth League is proposing is …. ‘a whole new ball game’, so to speak.

But surely we need to get the most out of our mineral resources – for the benefit of the poorest South Africans?

Why do you think state ownership of mines is likely to make them more productive … better generators of state funds, fairer to the workers … better for the environment …. more likely to feed back resources into local communities? All governments’ records as owner/managers of companies is appalling. And let me say that THIS government’s record as a  manager of the assets and resources it inherited stands out for reasons that probably no-one wants to brag about. The way to get the most out of the mines is to leave them to the professionals and tax them and oblige them to deliver certain social goods to just this side of the profitability margin.

Well, we have to leave it there … thanks Nic, and thank you all for listening …

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