* Mining Weekly
It's as absurd as landlocked Swaziland announcing a naval attack on South Africa -- NUM*
Martin Creamer <http://www.miningweekly.com/author.php?u_id=12>, Engineering News, Johannesburg, 13 May 2011
The general secretary of South Africa's National Union of Mineworkers (NUM) says talk of mine nationalisation is as absurd as landlocked Swaziland declaring a naval attack on South Africa.
Swaziland may say that it wants to attack South Africa with its navy, but the absurdity of the statement would be patently clear because Swaziland has neither a navy nor a sea.
Similarly, says *Frans Baleni*, leader of the influential NUM, which represents more than 300 000 South African mineworkers, South Africa has neither the money to nationalise with compensation, nor the Constitution that permits asset seizure without compensation.
The African National Congress (ANC) Youth League's most recent proposal is for the uncompensated expropriation of the entire mining industry, which would require an amendment to the Constitution.
In an earlier interview with /Mining Weekly/, former NUM president Dr *James Motlatsi* made the point that expropriation without compensation would cause the JSE to collapse, and set off a revolutionary backlash from the large numbers of ordinary citizens, mine-workers and civil servants whose retirement investments would be lost as a result.
The Free Market Foundation's book on nationalisation states that the holding of JSE shares by whites declined to 66% in 2010 from 77% in 2000, and the holding by blacks increased from 23% in 2000 to 34% in 2010, taking into account both direct and indirect share ownership through pension and provident funds.
It states that blacks now own 37% of retirement fund flows, a leap up from 23% in 1995, and 23% of mining shares, up from a mere 5% in 1994.
Economist *Dawie Roodt* estimates that half of mining profits already accrue to the South African government in taxes, making it an effective 50% shareholder of the country's mines.
At the other end of the scale, an immediate judicial shot across the bows for mine nationalisation protagonists, says regulatory lawyer *Peter Leon*, is this month's Pretoria High Court ruling on the uncompensated expropriation of Agri SA's unused old-order coal rights.
Leon, a Webber Wentzel partner and co-chairperson of the mining law committee of the International Bar Association, expects the Agri SA ruling to resonate well beyond the corridors of the court.
Meanwhile, the NUM has embarked on a campaign of "no decision about us without us, because we know the dire consequences of a reckless decision on nationalisation", says Baleni.
As it stands currently, the Constitution of South Africa precludes the nationalisation of private property without appropriate compensation and would require a two-thirds majority to change.
Baleni contends that this is an important clause, as nationalisation without compensation would come down heavily on mineworkers, "because of the significant volume of workers' retirement funds -- including the mineworkers' provident fund -- which are invested in South Africa's mines".
He defends the long period that the ruling ANC party is allowing for research into mine nationalisation on the grounds that political debates, unlike economic debates, require time.
"Let's allow that process to unfold. Mineworkers are the majority in this debate and we're participating fully and we're hoping that mineworkers' views will be taken seriously," Baleni adds.
Conversely, mine nationalisation with compensation is a nonstarter, because government does not have the R2-trillion-plus that it will cost to do so, and, even if it did, it would be inappropriate to spend the money on buying mines when the country was crying out for social services.
The ANC research team is conducting an international study tour, so that the party is able to be fully appraised of the issue ahead of its congress in 2012.
The research team includes former Mintek CEO and one-time Department of Minerals and Energy official Dr *Paul Jourdan*, University of the Witwatersrand academic *Pundy Pillay* and the Human Sciences Research Council's *Margaret Chitiga-Mabugu*.
Study tour countries include Botswana, Namibia, Zambia, Brazil, Venezuela, Chile, China, Malaysia, Norway, Sweden, Australia and Bolivia, with the study focusing on the "desirability and modalities" of nationalisation.
The ANC Youth League, the main advocate of nationalisation and led by the vocal *Julius Malema*, has criticised the composition of the research team, on the grounds that it does not reflect a "generational mix" and includes a person who has publicly pronounced his opposition to nationalisation.
Baleni says that the study group has been mandated to come up with a scientific finding that has taken into account where mine nationalisation has worked, where it has not worked and the potential consequences of nationalisation so that the politicians are fully informed ahead of taking a decision.
But some feel that the answer has already been found, notably Business Leadership South Africa (BLSA), whose members comprise the CEOs of the 70 largest enterprises operating in South Africa, including multinationals and State-owned enterprises.
BLSA CEO *Michael Spicer* has reported that an analysis of 180 mining regimes internationally had not found a single example of a successful nationalised mining sector.
"This is a plane that has flown . . . 180 pilots have flown this plane, and, whenever the industry has been nationalised, it's crashed," Spicer said.
Last week, Spicer remarked on national radio that business needed to do more to take the sting out of South Africa's prolonged nationalisation debate, a point also made by Motlatsi, who is far from impressed with the way that business has tackled the mine nationalisation issue thus far.
Motlatsi would like business, in general, and the mining industry, in particular, to be far more proactive and far less reactive on nationalisation.
He disagrees with the notion that the nationalisation bogey will simply go away on its own, and he decries those who abstain from taking part in crucial political debate of an economic nature.
He fears that, if South African business fails to act decisively, it may present political opportunity to those on the lunatic fringe.
Baleni says that Motlatsi's comments need to be taken "very seriously".He also believes that business is losing an opportunity to debate mine nationalisation with the degree of intensity that is necessary.
He is also keen that the ANC research team is given full access to data."Down the line, voters can remove parties from power. We know that the Prime Minister of Australia, *Kevin Rudd*, was unseated on a mining issue. Parties must account for all the decisions they take, especially politico- economic decisions.
"If you touch on workers' retirement finds, clearly it might lead to revolution.
"The research team must also deal with paying trillions of rands for some of the assets, which are 'dogs', instead of using the money to deal with social issues," Baleni comments to /Mining Weekly/.
*Agri SA Case*Leon says that, if the Agri SA decision is upheld on appeal, holders of unused old- order mineral rights who have lodged claims for compensation with the Department of Mineral Resources (DMR) will be entitled to "just and equitable" compensation in accordance with section 25(3) of the Constitution for the expropriation of their mineral rights.
This is despite the fact that the DMR has long argued that the Mineral and Petroleum Resources Development Act (MPRDA) does not expropriate privately owned mineral rights, but merely regulates them.
But Leon points out that the court made short shrift of this argument, finding that the Agri SA coal rights had been "legislated out of existence" because regulation presupposes continued ownership.
The case arose after Agri SA was asked to compensate the liquidators of a company called Sebenza, which had bought the coal rights in 2001, but did not use them, making them unused old-order rights under the MPRDA.
Sebenza's provisional liquidators tried to sell these rights post-MPRDA for R750 000 in September 2004, but could not because the MPRDA had rendered them void.
When the DMR refused to compensate the liquidators, they claimed compensation from Agri SA, many of the farmer members of which have unused old-order rights.
The court has found that the MPRDA deprived Sebenza of its coal rights in terms of section 25 (1) of the Constitution and awarded Agri SA R750 000 in compensation.
Leon says that, although the Agri SA decision only applies to those who have lodged compensation claims with the DMR, he believes that it is bound to have a much wider impact, not least in the light of the ANC Youth League's ongoing calls for the outright nationalisation of the South African mining industry.
Leon says that the ANC Youth League's most recent proposal for the uncompensated expropriation of the entire mining industry -- with concomitant amendments to the Constitution -- must not only be seen in the context of the estimated R850-billion market capitalisation of South Africa's mining companies -- and the likely compensation bill -- but also in the light of the Agri SA decision itself being a timely reminder of the supremacy not only of the rule of law, but ultimately also of the Constitution in a constitutional state.
The study by TNS Research Surveys found that 38% of South African adults want mines nationalised, 28% do not and 34% are ambivalent.
The study was conducted from a sample of 2 000 adults, including 1 260 blacks, 385 whites, 240 coloureds and 115 Indians and Asians.
*Edited by: Creamer Media Reporter **From: http://www.miningweekly.com/article/its-as-absurd-as-landlocked-swaziland-announcing-naval-attack-on-s-africa-num-2011-05-13*
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