As nationalisation rhetoric goes up, jobs will go down
The approach of the national conference of the National Union of Metalworkers of South Africa (NUMSA) has been accompanied by more loud rhetoric on nationalisation. It will have the inevitable consequence of investor withdrawal, the loss of new jobs and a reduction in current ones.
The NUMSA conference will be held just a week before the ANC policy conference and the political posturing is in full swing. NUMSA secretary general, Irvin Jim, stated that ‘NUMSA will be seeking to make things very clear that the Freedom Charter can only be implemented through nationalisation of mines, and all key strategic and commanding heights of the economy that include the Reserve Bank, Sasol and ArcelorMittal'.
The mining industry is already reeling from months of similar talk. The leaked proposals to the ANC's policy conference talk about new resources taxes, instead of nationalisation. This would not be as dramatically disastrous, but would cripple the mining industry just the same.
The rhetoric is not just coming from the wilder fringes of South African politics. A meeting of Parliament's Portfolio Committee on Mineral Resources heard two ANC members claim that South Africa's natural resources were being ‘raped' by mining companies. The committee was told there were only three choices for the country: the status quo, which was unacceptable; nationalisation, which was unaffordable; or a much, much larger state-owned mining company.
If the debate in the ranks of the ruling party continues to be cast in those terms, the mining industry will likely be hit by new restrictions and unfair competition. Potential investors will be further disincentivised and the mining industry will continue to shrink. In February this year, South Africa's mining production figures were the lowest in 50 years.
Those in the ANC who understand the dire consequences of this decline need to stand up and be counted. They need to stop using outdated rhetoric in attempts to court the left wing of their movement, and spell out honestly what South Africa needs to do to boost economic growth.
Mining needs to be rescued from the thicket of restrictions which has stopped it moving forward. Rules that curtail growth must be replaced by policies that attract investment and grow the industry. This will grow jobs rather than destroy them.
The Democratic Alliance will, over the next few months, be putting forward another vision for the South African mining industry. This new vision is one where onerous restrictions are lifted and investment is attracted. South Africa should leverage the massive competitive advantage presented by the mineral wealth under its soil. We need policies that allow us to exploit that wealth to the benefit of all our people.
Ordinary South Africans are being economically marginalised while the ruling elite entertain silly policies.
Statement issued by James Lorimer MP, DA Deputy Minister of Mineral Resources, June 4 2012
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