Mines minister Susan Shabangu repeated the mantra that nationalisation of the mines in Africa’s biggest economy was “not government policy”. [TNA]
Susan Shabangu is a light at the end of the tunnel passage. The problem is that there is a lot of darkness around her. I thought that, perhaps, contextualising the government’s official position, in a way that the Youth League might understand, would be funny.
Meanwhile, an interesting Reuters analysis explains why nationalisation is deadly.
All the estimates are more than enough to bankrupt the government of Africa’s biggest economy. As a rough guide — and the one put forward by the industry — the market capitalisation of listed mining firms in South Africa, including dual-listed giants such as Anglo American and BHP Billiton , is $270 billion, nearly half the value of the Johannesburg stock market and two thirds of South Africa’s gross domestic product. Even if the government was only to take a 50 percent controlling stake, that would still imply an outlay of $135 billion, roughly equivalent to the entire 2011/2012 budget.
Furthermore, threats to tweak laws in order to expropriate shares for a fraction of their value are rendered empty by international investment guarantees that would almost certainly trigger severe backlashes from South Africa’s trading partners. “Quite frankly, the figures are irrelevant because the compensation bill will be absolutely staggering,” said Peter Leon, a mining expert at Johannesburg law firm Webber Wentzel. “Malema’s answer that you just have to amend the constitution is not going to cut any ice because most of these companies are protected by bilateral investment treaties which provide for full market-value compensation.”
“We know the harm this acrimonious and reckless debate about nationalisation is doing to investments, to the good image of our country,” public enterprises minister Malusi Gigaba said this week.
Susan Shabangu needs more support.
