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South Africa’s ANC Asked to Adopt Bold State Intervention

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Dec. 19 (Bloomberg) -- A South African ruling party panel recommended “bold state intervention” and “redistributive” taxes to spread wealth in the economy, while rejecting wholesale nationalization of mines.

State ownership should only be “strategic” in industries deemed appropriate, the African National Congress’s economic transformation commission said in a document obtained by Bloomberg News. Enoch Godongwana, head of the committee, declined to comment on the report. The recommendations are the same as those contained in the ANC’s June policy document.

An ANC study published in February called for a 50 percent “resources rent tax,” triggered once companies earn returns in excess of about 15 percent annually, while ruling out the seizure of mines. The ANC’s policy meeting in June failed to reach agreement on new taxes, with members referring the issue to the national conference taking place this week in the central city of Bloemfontein.

South Africa is the world’s biggest producer of platinum and chrome, with Anglo American Plc, BHP Billiton Ltd. and Xstrata Plc owning assets in the country.

The report recommends “state ownership, including more strategic use of existing state-owned companies, as well as strategic nationalization, where deemed appropriate.”

ANC members will consider the recommendations at the conference tonight. If adopted, they may become government policies.

The economic transformation commision considered other recommendations, including a “use it or lose it” principle on mining exploration licenses, an export tax on chrome ore, and classifying iron ore, coal, copper and nickel as “strategic minerals” that should be managed in the national interest.

“The state must capture an equitable share of mineral resource rents and deploy them in the interests of long-term economic growth, development and transformation,” according to the report.

To contact the reporter on this story: Franz Wild in Johannesburg at fwild@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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