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May 29, 2017

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South African minister rejects nationalizing troubled mines

JOHANNESBURG -- Nationalization is not an option for South Africa's troubled mining industry, the country's mining minister told an international audience Tuesday, earning praise from those who advise potential investors.

A nationalization debate within mining minister Susan Shabangu's governing African National Congress (ANC) is said to have made foreign investors wary, depriving a key industry of capital.

According to the text of her speech opening an international meeting on the mining industry in Cape Town, Shabangu said a report by an ANC task team concluded "that nationalization is not a viable policy for South Africa."

"This is not a surprise," added Shabangu, who has at times appeared frustrated that her repeated pronouncements against nationalization have been drowned out by other ANC figures who have less influence on policy.

Nationalization has been pushed in particular by Julius Malema, the vocal and populist leader of the ANC's youth league. Malema's profile has been diminishing, in part because of accusations linking him to corruption in the awarding of government contracts for building roads and other projects in his native Limpopo, a northern South African province.

And over the weekend, ANC officials affirmed a party disciplinary committee's early finding that Malema is guilty of serious violations, including challenging President Jacob Zuma's leadership. He will get a chance to argue against a five-year suspension.

Alison Turner, an analyst with Panmure Gordon & Co., said that for some time, "I've been fairly outspoken in saying the nationalization threat is real and investors should be cognizant of that."

Turner, who heard Shabangu's speech in Cape Town, said she was reassured not only that the ANC had drawn conclusions against nationalization, but that Malema appears to have been sidelined.

"I think the immediate threat of nationalization has receded," Turner said, though she added concerns remained about whether new taxes and restrictions might be imposed on mining investment.

Manus Booysen, a mining specialist at the major South African law firm of Webber Wentzel, also raised concerns about taxes, but welcomed the minister's assurances on nationalization.

"The nationalization debate is a major issue for mining investment and it is a concern raised by investors worldwide," Booysen said in a statement.

In an email to AP, Lesiba Seshoka, spokesman for South Africa's National Union of Mineworkers, said his union had always believed the mining sector was too expensive to be taken over by the state. But he said the state must be a majority partner with private companies in mining strategic minerals.

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