A debate that will persist

THE nationalisation of mines in South Africa is a costly, high-risk proposition that should be adopted only as a last resort, an independent panel of experts is reported to have concluded after a year-long study of the policy in 14 countries. That verdict has not, however, ended a long-running and divisive debate. The ruling African National Congress (ANC), which commissioned the study, has sent the report back to the panel for redrafting, saying it wants “more options”.

The ANC's agreement to set up such an inquiry at all was seen as a victory for the party's powerful and militant Youth League. Under the slogan “economic freedom in our time”, it has been pressing the government to take over at least 60% of all mines, without compensation, to distribute the country's wealth more fairly. This, the league argues, would accord with the 1955 Freedom Charter's call for “the mineral wealth beneath the soil…[to] be transferred to the people as a whole”.

Nervous lest such views deter investors, President Jacob Zuma and his ministers went on repeating that nationalisation was “not government policy”. But this was not enough to silence the Youth League or to allay investors' fears. To increasingly receptive audiences, the league proclaims that mega-rich multinational mining companies are “stealing” the mineral wealth that rightly belongs to the poor masses.

Malusi Gigaba, the minister for public enterprises, has called the League's demands “reckless” and “cheap”. Susan Shabangu, the mines minister, said the whole debate was a “fruitless exercise” that would not help solve the country's triple scourge of poverty, inequality and unemployment. The mines would not be nationalised in her lifetime, she said. Trevor Manuel, the country's widely respected former finance minister who is now the national planning minister, decried it all as a “seriously bad idea” requiring billions of dollars the government did not have.

But such voices have been drowned out by others, including the Confederation of South African Trade Unions, a key ANC ally, who see nationalisation of the mines as the perfect solution to South Africa's deepening economic and social woes. According to a Citigroup report, South Africa's mineral deposits, worth an estimated $2.5 trillion (excluding energy minerals), are the richest in the world. Yet a third of the country's 50m people are dirt-poor.

But as Mr Manuel's National Planning Commission points out in its “Vision for 2030” submitted to the government last month, the country's mining industry needs investment above all. During the commodity boom in 2001-2008, it shrank by an average of 1% a year, whereas the world's other top 20 mining-export countries grew by an average of 5% a year. In 1970 mining accounted for 21% of South Africa's GDP; now the figure is just 6%. The sector is even smaller than it was in 1994, when the ANC first came to power, though it still represents almost 60% of exports.

Bobby Godsell, a former chairman of AngloGold Ashanti, the world's third-biggest gold-mining company, who is a member of Mr Manuel's commission, says the odds of South Africa's mines being nationalised are as remote as America's Federal Reserve Bank being abolished by the Republican Tea Party. The Youth League had developed “some unrealistic and unimplementable answers to some absolutely vital questions”, he says.

The ANC has asked the nationalisation panel to simplify its language, give more detail of other countries' experience and provide more options before submitting a final report early next year. What it really wants, many guess, is for the panel to soften its anti-nationalisation tone. After being debated at the ANC's policy conference next June, it will be submitted to the party's full conference for a vote in December next year. The uncertainty will persist until then and possibly beyond.