RESOURCE NATIONALISM: Investors must sit it out while South Africa’s ruling party is divided

Political manoeuvering will be rife in South Africa this year as the government mulls over the mechanisms it will be using to achieve its national interests in resources, forcing many investors to sit it out, according to shadow minister of mines James Lorimer.

Political manoeuvering will be rife in South Africa this year as the government mulls over the mechanisms it will be using to achieve its national interests in resources, forcing many investors to sit it out, according to shadow minister of mines James Lorimer.

The ruling African National Congress (ANC) party is deeply divided about how the government will obtain its share from miners’ wealth, he told Metal Bulletin.

Policy will only be decided and made official after the party conference in December, he said.

“[ANC] people are saying different things publicly, giving mixed signals as to what policies may be considered,” Lorimer said.

“I was gobsmacked last week when [Enoch] Godongwana [head of the government’s economic transformation committee] said that if Kumba [Iron Ore] did not play ball in providing a new state steel player with competitive cost-plus iron ore prices, the government could whack the company with high export taxes,” he said.

“I was amazed the ANC was quiet about it. No one said anything in response. Something like that would be suicide for our country,” Lorimer added.

Resource nationalism is a divisive and very emotional matter in South Africa because of the apartheid years, he said.

“The ANC is still driven by this ideological belief system that is manifested in a very emotional reaction around mining issues. So you get comments like those Godongwana made. It’s almost as if the ANC is a victim of its own ideology,” he added.

“Perhaps some people in the government have realised that nationalisation is a bad idea, which some of the ANC papers seem to suggest, but now they have to explain that to their constituents,” he said.

Other wings of the ANC support far heavier taxation, which Lorimer does not believe would be the best thing for the mining industry in South Africa or for investors looking to put money into projects in the country.

Party members are locked in disagreement about the different proposals on the table, Lorimer added.

For example, the National Development Plan was discussed in a parliamentary committee meeting last week, Lorimer said. He branded the document “very positive”.

“However, it was interesting to note the hostile questions Trevor Manuel [whose committee compiled the document] got from his own party. He has to sell very sensible solutions, but to implement these you have to take on very powerful vested interests,” Lorimer said.

Bianca Markram

editorial@metalbulletin.com


We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
Proceed