South Africa’s Mines Debate Weighs on Economy, Minister Says

South Africa is hurting its economy by debating the nationalization of mines and should focus instead on “adding value” to the metals and minerals it produces, said Mineral Resources Minister Susan Shabangu.

Nationalization “led to the collapse of the Eastern bloc” 20 years ago, Shabangu said today on Johannesburg-based SAFM radio. Boosting the value South Africa’s natural resources would help to tackle poverty, she said.

The ruling African National Congress is studying nationalization after its youth wing called for mines to be taken over by the government. Shabangu has instead called for an increased focus on so-called beneficiation, whereby metals and minerals are processed or treated to raise their value before being exported.

Both sides say their recommended course of action would create jobs in a country where a quarter of people are unemployed, while redistributing wealth to black citizens disadvantaged under apartheid.

The government will increase efforts to boost black involvement in mining, Shabangu said today. The industry hasn’t fully complied with rules aimed at reallocating wealth and its progress in employing more black people will be monitored more regularly, she said.

Wealth Distribution

While white men still dominate top management and earn more than black people, nationalization wouldn’t help to reallocate wealth, Cyril Ramaphosa, a member of the ANC’s highest decision- making body and chairman of mines investor Shanduka Group, said in the Johannesburg-based Sunday Times yesterday. ANC Treasurer- General Mathews Phosa and Public Enterprises Minister Malusi Gigaba last week also spoke out against nationalization.

South Africa, which has set up a state mining company, is consolidating government-controlled mining interests and will propose a final state-ownership plan to the Cabinet, Shabangu said.

The group set up by the ANC to study nationalization will probably complete its assessment around July or August next year, she said.

To contact the reporter on this story: Carli Lourens in Johannesburg at clourens@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net