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Hungry for more in South Africa

Posted on Monday, 26 January 2015 11:22

While firebrand oppositionist Julius Malema has been calling for the nationalisation of South Africa’s mines, ruling-party officials and local mining bosses are now demanding more action on local ownership.

That is the beauty of our country. Our country is a constitutional democracy

A resolution passed in October by the Gauteng provincial conference of the ruling African National Congress (ANC) states that, by 2030, 49% of the province’s key industries, and especially its mines, must be owned by black South Africans.

ANC provincial chairperson Paul Mashatile said the aim was to “break down monopoly capital, ensuring new entrants particularly from Africans and blacks in general, creating black industrialists.”

Pressure for change is coming from local business leaders too.

Bridgette Radebe, president of the South African Mining Development Association, told a parliamentary committee in August that the government must fight transfer pricing (by which multinationals artificially lower the price of exports to avoid tax) and encourage more local ownership.

She said local joint-venture partners are hurt by transfer pricing.

The finance ministry estimates that the state may be losing billions of dollars each year due to the practice.

The debate on transfer pricing could lead the government to reform its tax laws.

Radebe also wants the government to force companies to respect the 2004 Mining Charter.

Through this, companies agreed to raise the ownership share by historically disadvantaged South Africans to 26% by the end of 2014, a target that will not be met.

Radebe said she had asked President Jacob Zuma not to sign the Minerals and Petroleum Resources Development Act Amendment Bill until parliament can close loopholes that benefit international mining firms.

The Gauteng resolution on local ownership has led to accusations, including from the opposition Democratic Alliance (DA), that the ANC’s economic policy is ‘turning Zimbabwean’.

In neighbouring Zimbabwe, indigenisation legislation requires a minimum 51% shareholding for black Zimbabweans.

Nothing like Zim

The ANC government has long claimed that predictions the country would end up like Zimbabwe are both racist and wrong.

In mid-October, land-reform minister Gugile Nkwinti stated at a meeting with farmers that the law did not allow South Africa to implement a Zimbabwe-style land redistribution programme.

“Farmers say it’s unconstitutional, and they are right,” said Nkwinti. “That is the beauty of our country. Our country is a constitutional democracy.”

The ANC has come under pressure in Gauteng since the country’s general elections earlier this year revealed a steep decline in support and a strong showing for Malema’s Economic Freedom Fighters (EFF).

The ANC won 54% of the vote in Gauteng in the 2014 elections, down from 65% in 2009, while the EFF took 6%.

The DA won 21% in 2009, and 31% in 2014.

The EFF demands nationalisation of South Africa’s mines and banking sector, while the DA opposes any further compulsory increases in black ownership of the economy.

Tension with Zuma

Relations between the Gauteng ANC and President Zuma are frosty.

In December 2012, Gauteng was one of the few provinces to oppose Zuma’s continued presidency of the party at the ANC’s national conference in Mangaung.

The tension reduces the likelihood that the party’s leadership will take up Gauteng’s resolution, though a further battering for the ANC in the province in 2016’s local elections could change that.

Already, in September, Gauteng premier David Makhura– who was appointed by Zuma – told a meeting of residents that “it is time to adopt unorthodox methods because the orthodox methods have not been working.”

The Gauteng Province indigenisation resolution is sure to be taken to the ANC’s 2017 national conference, which will also see the election of a new ANC president to lead the party into the 2019 general elections.

If ANC deputy president and former mining magnate Cyril Ramaphosa is elected, the Gauteng ANC resolution is unlikely to find much favour.

However, Ramaphosa’s standing was dented by the Marikana massacre of 2012, when dozens of striking miners at Lonmin’s platinum mine were gunned down by the police.

Ramaphosa was the director of Lonmin’s black economic empowerment partner at the time, and apparently pushed for stronger police intervention before it happened.

If the mood at the ANC’s national conference swings away from Ramaphosa and towards a candidate from the left, it could be a different story for Gauteng’s proposal.

Within the mining community, reactions to the Gauteng resolution are mixed.

Foreign-owned mining executives privately expressed strong hostility but declined to comment in public.

Black South African entrants to the sector have been openly more positive. ●

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