Nationalising the mines a just cause but...

By Zukiswa Mqolomba

Firstly, the ANC Youth league must be applauded for raising debate on key and critical questions about the need to unlock natural productive forces in pursuit of national development.

The league has tried to put both a strong historical account and case for nationalisation on the one hand, and an ideological basis for it on the other, using various models and options of state ownership precisely because they want to answer this key question: How do we utilise mineral wealth beneath the soil for human development?

The “national question” cannot and should not be tossed aside by corporate South Africa as hitherto mediocrities of a rambling mad man.

Indeed there is a compelling case for nationalisation.

Firstly, the ANC does have a responsibility and revolutionary task to changing the fundamental structure of our productive economy. The ANC NWC document, para 6.1, June 2006:

“Access to state power should be utilised to deracialise patterns of ownership and control of wealth; reconfigure the distribution of national resources in favour of the poor and utilise the government budget, the economic power of state-owned enterprises and capital in the hands of working people to change the structure of the economy.”

Secondly, strategic control of mining is particularly important in efforts to counter price-fixing of beneficiated products on our local market. Sasol, for example, is notorious for undermining local downstream producers (and therefore job creation) with its price-distorting monopoly behaviour. Steel producers are also currently under investigation for price collusion.

Thirdly, nationalisation would signify an important move away from BEE towards Broad Based Black Economic Empowerment (BBBEE). Is it not the case that BBBEE is intended to resocialise the economy and to distribute wealth across as broad a spectrum of South African society as possible?

However, I think the ANCYL has failed to grapple with the tactical considerations and objective realities of realising a progressive agenda of this nature. The challenge of nationalisation has never been about strategic intent, but tactical considerations and tactical strategies. Having acknowledged Dialego’s caution, the ANCYL must also heed to the organic approach to policy propositioning. Umrabulo No 7 (1999):

“Our priorities and programme … should be informed by a common understanding of the balance of forces. As we said in our Strategy and Tactics (1997) the balance of forces are ‘critical to defining the tactics the liberation movement should adopt at each stage of transformation’. This should also inform the specific decisions we take eg on issues such as prescribed assets or changes in policies. This is also important when we consider the question whether — at a given time — when we implement policies of the ANC or a joint programme of the alliance, we do so because of constraints imposed by the balance of forces or whether our approach is determined by revolutionary logic.”

We must remember that our Marxist tools of analysis compel us to move beyond mere abstractions and philosophies in explaining what is, and instead to be tacticians and strategists in our attempts to change the world.

And truth be told, there is also a compelling case unfavourable to nationalisation.

In making subjective determinations on the basis objective analysis, we should bear in mind the unintended consequences of a just cause, the complex realities of the current global and national recession, the questions around mining viability, rising capital expenditure, cost implications, productive efficiency requirements, as well as structural impediments.

Firstly, experts have argued that nationalisation might have the unintended consequence of simply bailing out indebted private capital, especially BEE mining interests. According to government reports, government estimated that some 80% of BEE deals were under the threat of being liquidated and indebted, as a result of the global recession. BEE mining shares were particularly hard hit as a result of the sharp fall in commodity prices on the global market. And while there has been something of a recovery for some commodities, the robustness of the recovery of these mines still remain very uncertain.

Secondly, it is opportune to ask whether it would be viable for the state to take over the mining sector, in the context of increasing depletion of mines dealing with non-renewable natural resources and electricity price hikes. Though global gold prices have begun to recover from the bullets of the recession, our gold output has dropped by app 9% within the same period. The increases in Eskom electricity hikes of up to 45% also dampen the economic prospects of the sector. Electricity is estimated to be between 10% and 15% of mining operation costs.

Thirdly, the exercise of nationalisation is bound to be a costly one. In this instance, it is important to note that though the Property Clause in the Bill of Rights actually sanctions expropriation “for a public purpose or in the public interest”, the Bill of Rights still requires the payment of compensation for expropriation, at a price either agreed to by both parties or determined by a court. This will always be the case unless constitutional changes are made to the contrary. An investigation into actual figures (ie looking at the market valuation of South African gold shares to get an idea of the expropriation compensation that might be required, rough estimate of the cost of servicing the debt involved, a look at what the companies have paid in dividends) gives a good indication of how much this is likely to cost.

Unfortunately, it is highly likely that the state will find itself in a situation of wasting billions of rands in compensation at a time when we have other pressing priorities that actually have a better chance of success to contributing to a fundamental transformation of our current accumulation trajectory, as problematic as it might be perceived.

Nationalisation does not necessarily provide the best stimuli for development, because there are no incentives for good performance due to the lack of competition.

Most importantly, nationalisation cannot and does not address the systematic structural realities that lock South Africa into a semi-colonial status in the world economy. Unfortunately, nationalisation cannot resolve that much of the activities at the higher levels of the production value chain happens off South African shores (ie processing and beneficiation). In the case of aluminium smelter plants, for instance, they are huge electricity gobblers, and the bauxite used for the production of aluminium is not even mined here, but shipped over from Australia.

The league must therefore provide leadership on the strategic and tactical questions around nationalisation. And contend with glaring realities. In my judgment, the cause of nationalisation is a just and ideal cause. However, the case for nationalising the mines is yet to be made convincingly by the ANCYL.

Karl Marx, in 1837:

“If we have chosen the position in life in which we can most of all work for mankind, no burdens can bow us down, because they are sacrifices for the benefit of all; then we shall experience no petty, limited, selfish joy, but our happiness will belong to millions, our deeds will live on quietly but perpetually at work, and over our ashes will be shed the hot tears of noble people.”

Zukiswa Mqolomba is completing her master’s degree in social sciences at the University of Cape Town. This article reflects her personal opinions.