Feasibility of Nationalising the South African Mining Sector Essay

IntroductionThe excavation industry forms the foundation of South Africa’s economic system. Currently South Africa is the biggest manufacturer of Pt in the universe and one of the top manufacturers of gold. Julius Malema. the leader of the African National Congress Youth League ( ANCYL ) was at the head of holding a elaborate position on the nationalization of mines in South Africa at the beginning of 2010. Malema believes the nationalization of mines will work out all economic disparities in South Africa.

There are many South Africans who agree or disagree with this thought. The undermentioned treatment will supply replies to why it should be done and who benefits or why it should non be done and what the defects are and the costs that the state will incur if it were to be done every bit good as illustrations of nationalization in other states ( Roberts. 2011 ).DiscussionNationalization is the operation of reassigning ownership from the private sector to the populace sector.

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Harmonizing to the curate of finance. Mr Pravin Gordhan stated on the March 14. 2011 that nationalization of South Africa’s mines and other economic assets are non authorities policy. “Nationalisation of mines means the democratic government’s ownership and control of Mining activities. including geographic expedition. extraction. production. processing.

trading and mineral extraction of Mineral Resources in South Africa” ( ANCYL. 2010 ). Therefore this would intend that no mines would be publically owned but they would be owned by the province. It has been 16 old ages since apartheid and the white minority of 10 % of the population owns 80 % of the country’s economic wealth.

The Freedom Charter is a papers that expresses the economic. societal and political will of South Africans and harmonizing to the papers. the mineral wealth of South Africa belongs to the people as a state. “It is against this background upon which a concrete place on the nationalization of Mines is formulated in order to steer the ANC in the transportation of mineral wealth beneath the dirt to the ownership and benefit of the people as a whole” ( ANCYL. 2010 ). If the province owns the mines it would let them to pull off the economic system by commanding the of import industries. They could besides put a larger sum of money and do their services more efficient.

Nationalization of the mines does non intend all sectors are in the custodies of the country’s citizens and that they will profit from all the sectors. It does non yet state anyplace what the ratio ( between province owned and in private owned ) of the division will be when nationalizations occurs. if it does.

Therefore people shouldn’t think that the province will automatically hold over half or a larger per centum.An of import factor is whether nationalization will be with or without compensation. It would about be impossible to nationalize with compensation as the authorities presently doesn’t have the figure of about R 2-trillion which is how much it would be to buy the mines.

But on the other manus. expropriation without compensation would do a prostration of the Johannesburg Stock Exchange ( JSE ). This would convey down provident and pension financess at the same clip. A big figure of retainers and citizens would be without their retirement investings as good ( ANCYL. 2010 ). Therefore this poses a large job already.

Some people might believe why the mines should be nationalised. Below are three grounds.1. “Nationalisation to increase the State’s financial capacity and better the working conditions” ( ANCYL. 2010 ). It states that the money received from revenue enhancements is non plenty to assist each and every individual South African citizen.

which it is non. Education. health care. safety and security and lodging will non be provided to the multitudes if the authorities is non in control of the of import sectors. There have been other success narratives.

such as in Botswana where nationalizing the mines provided miners with a safer working environment and higher rewards. 2. “Nationalise to Industrialise and Create more jobs” ( ANCYL. 2010 ).

More occupations will be created and industrial investors will be attracted to add to education. expertness and the economic system. 3.

“Nationalisation to transform South Africa’s unequal spatial development patterns” ( ANCYL. 2010 ). This means the countries that will be focused on will be 1s which will be sustainable in the hereafter every bit good as effectual. Smaller countries that have ne’er been mined before could be targeted as it will supply more occupations in these countries which seldom see economic activity ( ANCYL. 2010 ).

Malema believes that everybody in South Africa has the right to the wealth that is produced and that the province should have the larger portion of the mines. “South Africa is divided as we speak. We’ve got two economic systems in one state. two states in one state. and it is nationalisation that will unify us” ( Andrew. 2011 ). He besides believes many occupations will be created one time the mines are nationalised.

Patrice Motsepe. a South African man of affairs. provinces that he would endorse Malema’s determination every bit long as it is in the best involvements of South Africa.

The ANCYL believes South Africa’s minerals. H2O. land and marine resources should be used to maximize growing of South Africa’s economic system and non strictly for net income ( Shivambu. 2010 ).If the mines are nationalised. new economic Centres will be developed.

new industrial development zones will be established. occupations will be created as the mines owned and controlled by the province will increase local mineral extraction and industrialization of the available mineral resources. and local economic systems will be developed ( Shivambu. 2010 ). General Secretary of Congress of South African Trade Union ( COSATU ). Zwelinzima Vavi says that “Nationalisation can bolster our economic system and it will ever guarantee development” ( Beukes. 2011 ).

He said that the nationalization of the mines will do available money to all the people of the state. non merely those who are presently working in the private sector ( current mine proprietors ) ( Beukes. 2011 ). One of the ANCYL’s statement is that nationalization was a demand found in the Freedom Charter and that South African citizens should portion the mineral wealth of the state between each and every one ( Achary. 2010 ).Therefore there are valid grounds for the mines to be nationalised but the major concern is the cost that the state would incur to do nationalization happen.

“Nationalisation is an unaffordable. prematurely and honestly unneeded suggestion. which has already undermined market stability” ( Time.

2009 ). It would be South Africa R1. 4 to R2 trillion to nationalize the mines which seems silly if you think South Africa has the 5th biggest excavation industry in the universe. This figure does non include excess running costs every bit good as the costs that go with running loss-running mines. This shows it is a large portion of the economic system and would be tough to be nationalised. This figure is the same as trebling South Africa’s national debt over a individual dark.

which is unrealistic ( Time. 2009 ). “The argument on the thorny issue heated up with concern executives and analysts warning that nationalization would damage the economy” ( Isa. 2011 ). Many say it is a catastrophe and has been for every state who has tried to draw it off. Susan Shabangu said “consideration of the measure was misguided. as the existent issue was to turn to poorness. unemployment.

and inequality” ( Isa. 2011 ).This shows that the arguments that are ongoing will discourage foreign investings. The ANC do gain that it’s near to impossible to nationalize the mines and come off on the right pes but are presently looking at theoretical accounts of how it could be implemented efficaciously ( Isa. 2011 ). The nationalization of mines has besides been seen as a gambit to seek and salvage Black Economic Empowerment ( which has been in topographic point in South Africa for a piece.

but has non achieved what it hoped to ) and non concentrating on the sum of hapless in the state every bit good as the sum of unemployed workers ( Business Day. 2011 ). The market value of South African mines ( listed ) is about 850 billion rand which is above a 3rd of the country’s entire Gross Domestic Product ( GDP ). Therefore the authorities should be more concerned over affairs such as the instruction degree and the wellness of the states people.

“Zambia nationalised the Cu mines. which supplied 90 % of its exports. in the early 1970s. It ended up engaging back the transnational Cu companies to pull off them” ( News24. 2010 ). Zambia is the world’s 11th largest manufacturer of Cu. The mines were nationalised in 1969 and at this clip were exporting approximately 700 000 metric tons of Cu per annum. By the twelvemonth 2000.

exportation figures had invariably decreased to 225 000 metric tons. The consequence of the diminution was partially because of a deficiency of investings every bit good as misdirection of the mines. “Zambia has neither the capital nor the accomplishments to run the mines by itself” ( Time. 1969 ). Other factors were the bead in the monetary value of Cu. a deficiency of accomplishments among the citizens in Zambia and they were unable to raise capital. They lacked a strong program with which to endorse up their initial purpose ( Time.

1969 ).Restrictions were placed on exports and imports which resulted in exchange rates lifting and hence additions from exports reduced. Zambia besides failed to salvage net incomes when the Cu monetary value was high and therefore when the monetary value fell. they suffered vastly.

Even though the state of affairs is non precisely the same. it does demo that to nationalize mines a batch of argument demands to happen every bit good as research and evidently the state needs the needed financess to do certain it can be made possible. South Africa does non hold these financess at the minute and therefore would non be able to nationalize the mines unless they are willing to run with immense debts which is impracticable ( Osei-Hwedie. 2003 ).

Decision“Nationalisation is an unaffordable. prematurely and honestly unneeded suggestion. which has already undermined market stability” ( George. 2009 ). This statement sums up the thought of nationalization of mines in South Africa. It evidently has its advantages such as giving higher rewards and making more occupations but it is clearly apparent that the positives are outweighed by the negatives. With so many occupations in South Africa’s excavation sector at interest. it is irresponsible to speak about puting this cardinal sector of the economic system in the custodies of authorities people.

The state does non hold about adequate financess for this undertaking to take topographic point and therefore in my position should non take topographic point in even in the close hereafter ( Marais. 2010 ).Reference ListACHARY.

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