The National Executive Committee (NEC) of the African National
Congress (ANC) held its bi-annual strategy meeting or lekgotla from
27 to 29 July 2012. Among a number of exigent issues, the NEC
addressed the question of greater state intervention in the South
African mining sector. It announced that it would finalise a list
of strategic minerals by September that will become the target of
domestic beneficiation quotas and potentially even targeted
State intervention in the mining sector has arguably been central
to the country's economic transformation debate since December
2007, when the ANC elected its new leadership in Polokwane and
resolved that the state should "intervene strategically"
in the mining sector "to drive the growth, development and
transformation of the structure of our economy".
This debate intensified in 2009, when the ANC Youth League, led by
its then President Julius Malema, called for the nationalisation of
the South African mining industry without compensation. The NEC
responded in November 2010 by commissioning a research report into
state intervention in the minerals sector (the SIMS report). The
report was released in February 2012 and summarised in a discussion
document for the ANC's national policy conference at the end of
While the SIMS report rejects the wholesale nationalisation of
mining companies as unaffordable and unconstitutional, it retains
the option of nationalising specific companies, "particularly
for strategic monopolypriced mineral feedstocks". It also
recommends a formidable array of interventionist regulatory
"reforms". The SIMS report has been widely criticised,
not only by the mining industry and the investment community, who
contend that it goes too far and will harm growth, but also by the
ANC Youth League, who protest that it does not go nearly far
It appears that the ANC itself is divided on the merits of the
SIMS report's proposals, leading to an unusual delay in the
public release of the resolution agreed upon by the economic
transformation committee at the party's June policy conference.
Six of the nine provincial delegations to the policy conference
reportedly favoured a model of "strategic
nationalisation" of targeted mining companies when justified
"by the balance of evidence"; arguably the most extreme
of the SIMS report's proposals.
Although the adoption of the strategic nationalisation policy has
been publicly confirmed by several party officials, it is not clear
what would determine the "balance of evidence" nor which
minerals might be deemed "strategic". However, at the end
of last week's strategy meeting, ANC Secretary-General Gwede
Mantashe announced that a list of strategic minerals (to be the
target of greater state intervention) would be finalised by the
next NEC meeting in September. According to Mr Mantashe, a starting
point for this is the SIMS report, which identifies coal, iron ore
and platinum group metals, among others, as strategic minerals.
These minerals may become subject to export tariffs, infrastructure
tariffs and other measures to ensure their secure supply to
state-owned entities, as well as cheaper supply to domestic
industry to stimulate job creation and greater
At its strategy meeting the NEC also agreed that South
Africa's mineral regulatory approval system should be
simplified; that a portion of strategic minerals should be
"set aside" for local beneficiation; and that mineral
feedstock input costs should be reduced "with the state
playing a critical role in this regard". No detail was
provided about any of these interventions, and it is not yet clear
whether the list of strategic minerals or the details of any of the
other proposed interventions will be made public once it is
finalised in September.
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