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South Africa - Mining

The debate over nationalization of the country's mines is one example where the debate is about personal ambitions and not whether such a policy would enhance South Africa's economy. In a press conference at the opening of the Africa Mining Indaba (conference) in Cape Town on 02 February 2010, Minister of Mineral Resources Susan Shabangu stated clearly that nationalization of the mines in South Africa is neither government policy nor on the government's agenda. She said, "I can say in my lifetime there will be no nationalization. Maybe when I am dead and rest assured I'm not dying next week." Over the previous few months, President Jacob Zuma and Deputy President Kgalema Motlanthe had said there will be no change in the country's policy and nationalization is not in the cards. Mining executives in general have dismissed the calls for nationalization as hot air. Even the SA Communist Party called the proposal inappropriate for the country's state of development. In a presentation at an Eskom power plant, Deputy Minister of Public Enterprises Enoch Godongwana was dismissive of the reaction to the calls for nationalization. He said, "The debate has been going on for my lifetime, why should it scare investors now?"

ANC Youth League President Julius Malema had been stridently beating the drum for nationalization of mines. Minister Shabangu apparently aimed to give a clear and emphatic response to quiet concern on the issue. The ANCYL nastily escalated the row by saying Shabangu did not understand the ANC and accusing her of lying. The ANCYL said Shabangu should stop "misleading Qher of lying. The ANCYL said Shabangu should stop "misleading investors" and "sucking up to monopoly capital", and questioned her fitness for office. Malema also criticized De Beers Chairperson Nicky Oppenheimer, who dismissed the call for nationalization. Malema said it is up to the ANC "to take from his (Oppenheimer's) family what belongs to the people of South Africa." It is not clear what drives the ANCYL's obsession with nationalization of mines. The Government has been cautious in its response, ultimately stating that nationalization does not make any sense or have any basis in policy or law. However, some foreign investors remain concerned and do not necessarily distinguish between serious proposals, debate, and hot air.

The mineral industry accounted for 8.6% of the gross domestic product in 2010; crude and processed mineral products accounted for 48% of the value of total exports. About 74% of crude mineral products and 82% of processed mineral products, by value, were exported in 2010. Employment in the mineral industry amounted to 498,141 in 2010 compared with a revised 491,744 in 2009 and 418,294 in 2000. In 2010, PGM mining accounted for 36.5% of the mineral industry’s employment; gold, 31.5%; coal, 14.8%; iron ore, 3.7%; chromite, 2.8%; diamond, 2.2%; and other minerals, 8.4%. In 2000, gold mining accounted for about 52% of the mineral industry’s employment, PGM, 23%; and coal, 12% .

The Republic of South Africa remained one of the world’s leading mining and mineral-processing countries. In 2010, South Africa’s estimated share of world platinum production amounted to 75%; kyanite and other materials, 61%; vermiculite, 40%; chromium, 39%; ferrochromium, 38%; palladium, 37%; zirconium, 33%; vanadium, 32%; rutile, 22%; ilmenite, 19%; manganese, 17%; gold, 8%; nickel, 3%; phosphate rock, 1%. The country’s estimated share of world reserves of platinum-group metals (PGM) amounted to 95%; chromite, 37%; vanadium, 26%; zirconium, 25%; manganese, and ilmenite, 10%.

The Government’s Black Economic Empowerment program required that black ownership of mining companies reach 26% by 2014. In September 2010, the Government introduced its new Mining Charter, which required mining companies to purchase 70% of their services, 50% of their consumable goods, and 40% of their capital goods from Black Economic Empowerment entities by 2014. Companies were also required to report progress annually on development of near-mine communities and sustainable growth.

Most of the South African mineral industry was privately owned. The production of diamond and gold, which were produced mostly by artisanal miners in many African countries, was dominated by large-scale producers in South Africa. The leading producer’s share of total output varied sharply by commodity; the leading producer of diamond accounted for 85% of national production; iron ore, 74%; manganese, 47%; nickel, 39%; gold, 31%; and coal, 23%.

In 2010, exports of PGM amounted to $8.62 billion; gold, $6.68 billion; iron ore, $5.26 billion; coal, $4.81 billion; manganese ore, $1.22 billion; nickel, $643 million; chromite, $322 million; copper, $158 million; and other crude mineral products, which included diamond, ilmenite, rutile, and zircon, $1.79 billion. Exports of ferrochromium amounted to $3.17 billion; manganese metal and alloys, $919 million; vanadium alloys and other vanadium products, $286 million; silicon metal and alloys, $196 million; and other processed mineral products, which included aluminum, $2.04 billion.

In 2010, PGM mine production was 287,304 kg compared with 271,393 kg in 2009 and about 206,800 kg in 2000. From 2000 to 2010, the share of platinum in PGM production by volume decreased to 51% from 55%. During the same period, employment in PGM mining increased to 181,969 workers from about 96,000.





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