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THE TALE OF TWO CITIES It was the best of times, it was the worst of times,

NATIONALISATION OF MINES: the question for South Africa TO THE AFRICAN MINING NETWORK DINNER ON 17 NOVEMBER 2011 a perspective by Bheki Sibiya Chief Executive Chamber of Mines of South Africa. THE TALE OF TWO CITIES It was the best of times, it was the worst of times,

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THE TALE OF TWO CITIES It was the best of times, it was the worst of times,

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  1. NATIONALISATION OF MINES:the question for South AfricaTO THE AFRICAN MINING NETWORK DINNERON17 NOVEMBER 2011 a perspective byBheki SibiyaChief ExecutiveChamber of Mines of South Africa

  2. THE TALE OF TWO CITIES It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, It was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.

  3. Mining- The Essential Core Of SA Economy • Creates 1 million jobs (500 000 direct & 500 000 indirect). • Accounts for about 18% of GDP (8.6% direct, 10% indirect & induced). • Critical earner of foreign exchange >50%(primary & beneficiated minerals). • Accounts for 20% of total investment (12% direct). • Attracts significant foreign savings to South Africa (accounts for R1.9 trillion or 43% of value of JSE). • About 18% of corporate tax receipts (2010 R17bn) & R6 billion in royalties. • R441 billion in expenditures, R407 billion spent locally. • R78 billion spent in wages and salaries • 50% of volume of Transnet’s rail and ports • 94% of electricity generation via coal power plants • 15% of electricity demand • About 37% of country’s liquid fuels via coal

  4. 92% of the mining industry’s expenditures are captured locally

  5. Source: USGS/COM/DMR

  6. South Africa has most of the World’s Top Mining Companies participating in the country

  7. THE CHALLENGES & IMPLICATIONS OF NATIONALISATION SCENARIOS NATIONALISATION WITH COMPENSATION: WHERE WOULD MONEY TO COMPENSATE THE CURRENT OWNERS COME FROM ? Our passenger coaches are falling apart, Our cargo rolling stock is insufficient and also falling apart, We have insufficient supply of electricity due to limited capex. Consequently some multi billion dollar projects have been cancelled, We cannot afford to train enough investigators for the Office of the Public Protector, A number of State Owned Enterprises are crying for funding, We have the highest Government Debt as a % of GDP in the history of the Country. While South Africa is not broke ,it does not have enough liquidity for its regular expenditure HOW CAN IT AFFORD TO PAY FOR THE ACQUISITION OF MINES?

  8. THE CHALLENGES & IMPLICATIONS OF NATIONALISATION SCENARIOS NATIONALISATION WITHOUT COMPENSATION: Some of the 42 countries with Bilateral Investment Protection Agreement would file for breachs, Rating agencies would downgrade the Sovereign rating of RSA, Foreign Direct Investments would stall, Mining maintenance would fall dramatically, Mining production would comparably fall, Railway throughput would also fall fast, Unemployment would skyrocket, Foreign earnings would fall dramatically, The Banking and Financial sector would collapse, Tax revenues would be on a free fall, Illegal Mining would blossom, The Rand would weaken worse than the ZimDollar,Inflation….

  9. WHY REALLY IS THERE A CALL FOR NATIONALISATION • THE SOUTH AFRICAN ECONOMY IS FACING A NATIONAL CRISIS THAT IS MULTI-PRONGED: • 1. THE EVIL TRIPLES OF: • HIGH LEVELS OF UNEMPLOYMENT-26% OVERALLY AND MORE THAN 50% FOR THE YOUTH BETWEEN 18 AND 35, • HIGH LEVELS OF POVERTY-MORE THAN 20% OF THE POPULATION LIVES BELOW POVERTY LINE INSPITE 14 MILLION PEOPLE RECEIVING GOVERNMENT GRANT EVERY MONTH, • SOUTH AFRICA IS THE MOST UNEQUAL COUNTRY IN THE WORLD: THE WEALTHY ARE FILTHY RICH & THE POOR ARE PITIFULLY POOR. • 2.CORRUPTION AND PLUNDER OF STATE RESOURCES- • MORE THAN R23 BIL OF STATE RESOURCES ARE STOLLEN EVERY YEAR, • 3.EXTREMELY POOR QUALITY OF PUBLIC SCHOOL EDUCATION, • CURRENT PUBLIC SCHOOLING IS WORSE THAN BANTU EDUCATION PRODUCING STUDENTS WHO ARE NOT WORK READY/UNEMPLOYABLE. • 4.LARGE,INEFFICIENT AND EXTRVAGENT CIVIL SERVICE, • 5.SLOW PACE OF ECONOMIC(BLACK ECONOMIC EMPOWERMENT) TRANSFORMATION

  10. A BRIEF HISTORICAL PERSPECTIVE TO A NATIONALISATION DEBATE • NATIONALISATION HAS SOME OF ITS ROOTS IN THE FREEDOM CHARTER WHICH STATED THAT : • The minerals resources beneath the soil shall belong to the people as a whole. • THE MINERALS & PETROLEUM RESOURCES DEVELOPMENT ACT OF 2002, STATES THAT: • The State is the custodian of all the mineral deposits in South Africa. • CONSEQUENTLY,THE CHAMBER OF MINES AND THE NATIONAL UNION OF MINEWORKERS HOLD THE VIEW THAT THIS DECLARATION OF THE FREEDOM CHARTER HAS BEEN FULFILLED • IN OTHER WORDS THE MINERALS HAVE BEEN NATIONALISED

  11. WHAT HAS BEEN THE MINING INDUSTRY’S RESPONSE • IT TOOK COMFORT IN MINISTER SUSAN SHABANGU’S BOLD STATEMENT THAT NATIONALISATION WOULD HAPPEN OVER HER DEAD BODY, • IT WAS ASSURED BY PRESIDENT ZUMA’S STATEMENT THAT NATIONALISATION WAS NOT THE POLICY OF THE ANC, • IT TOOK TO HEART A NUMBER OF OTHER KEY STAKEHOLDERS PUBLICLY TAKING A PUBLIC STANCE AGAINST NATIONALISATION E.G. • THE NATIONAL UNION OF MINEWORKERS, • COSATU BEFORE IT STATED FLIP FLOPPING, • SA COMMUNIST PARTY, • PUBLIC ENTERPRISES MINISTER GIGABA, • OFFICIAL OPPOSITION DEMOCRATIC ALLIANCE, • HOW CAN IT AFFORD TO PAY FOR THE ACQUISITION OF MINES?

  12. WHAT HAS BEEN THE MINING INDUSTRY’S RESPONSE 4.IT SUPPORTED THE ANC RESEARCH WORK INTELLECTUALLY AND FINANCIALLY, 5.IT PRIVATELY LOBBIED A NUMBER OF THE KEY STAKEHOLDERS, 6. IT CONDUCTED THROUGH ITS MEMBERS, ITS OWN STUDY ABOUT NATIONALISATION EXPERIENCES AROUND THE WORLD, 7.IT CONDUCTED A DEEP INTROSPECTION TO EXPLORE WHERE IT COULD HAVE DONE WRONGS AND HOW TO EFFECT CORRECTIONS, 8.IT ENGAGED WITH THE ANC’S RESEARCH TEAM, 9.TOMORROW, WE ARE HANDING OVER OUR SUBMISSION WHICH WILL BECOME A PUBLIC DOCUMENT LATER THIS YEAR, 10. WILL IT BE SUFFICIENT: NO. UNEMPLOYMENT, POVERTY AND INEQUALITY IS A NATIONAL CRISIS WHICH CANNOT BE SOLVED BY NATIONALISATION: NOT NOW, NOT EVER.

  13. CLOSING REMARKS • The ANC Study Group will complete its work and present it to the ANC’s National Executive Committee in November 2011, • The ANCplans to hold its Policy Conference by July 2012, • The ANC will hold its Elective Conference in December 2012,in Mangaung, Bloemfontein. • While there is a possibility of all these structures recommending/deciding to nationalise, this will not be the end of the road.

  14. THANK YOU

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