The ANC YL decided to release preliminary notes on nationalisation so as to
properly guide the discussion and debate currently happening in the public
discourse. Lots of confusion was generated in the minds of some amongst
those who responded to our call. Here we publish our preliminary thoughts
around nationalisation, and request further inputs from the patriotic South
Africans and any other person who cares about the development of our people.
The notes clarify the misconceptions and will assist our discussion of
modalities towards nationalisation of Mines.

* *

*ON NATIONALISATION OF MINES-PERSPECTIVE *

* *

*July 2009*

The year 2009 marks exactly 10 years of Susan George's presentation to the
Conference on Economic Sovereignty in a Globalising World, titled "A short
history of neo-liberalism". During the Conference, Susan George made
profound observations, including the fact that:

"the ideological and promotional work of the right (neo-liberals) has been
absolutely brilliant. They have spent hundreds of millions of dollars, but
the result has been worth every penny to them because they have made
neo-liberalism seem as if it were the natural and normal condition of
humankind. No matter how many disasters of all kinds the neo-liberal system
has created, no matter what financial crises it may engender, no matter how
many losers and outcasts it may create, it is still made to seem inevitable,
like an act of God, the only possible economic and social order available to
us" (George, 1999).

This observation rings very true in South Africa's public discourse,
particularly when judging the reactions of mainstream media and some in
government to the ANC Youth League's call for nationalisation of Mines, i.e.
State ownership and control of the extraction, production, processing, and
trade of mineral wealth in South Africa. Instead of closely examining the
ANC YL's call, most commentators rushed in where angels fear to tread and
feebly labelled the ANC YL various despicable things, which should not be
repeated on this measured intervention, because it seeks to clarify the
ground-breaking Youth League's perspective.

Various newspapers' editorials attempted to deflect the attention from the
essence raised around nationalisation of Mines, but such should not weaken
our focus towards attainment of the Freedom Charter objectives. For
instance, the Sunday Times' editorial on the nationalisation of Mines is
part of the reactionary, but an extremely weak and sad attempt to deflect
the attention from what is genuinely raised by the ANC YL on the
nationalisation of Mines. The frail argument the Sunday Times gives in
opposition to the call for nationalisation is drowned in the ranting and
conspiracies that precedes the paper's argument. We nevertheless should
engage the newspaper's ideological disposition, and totally reject, or
perhaps ignore the lame accusations and conspiracies touted before their
weak argument against nationalisation.

Our response here will try to cover all the issues raised by various role
players, including Spokespeople of investors, and commentators inside and
outside South Africa. It is useful that we mention here that this response
is an extract from the broader perspective which the ANC YL will use to
engage with all stakeholders. The ANC's official position is that the debate
on nationalisation is open, so we expect measured contributions and
critiques from various quarters, and hopefully, those will not be
overcharged with attempts question our bona fides.

*Conceptual Basis *

* *

Before we consider the question of nationalising mines in particular, it
will be important to begin by outline our understanding of nationalisation
in general:

*Firstly*, we proceed from the understanding that nationalisation is not
be-all of economic transformation. In other words, having nationalised key
parts of the economy does not automatically mean that indeed the wealth is
in the hands of the people and that the people will benefit from such
wealth. Nationalisation is not a panacea for South Africa's developmental
challenges, but it should in the manner we are proposing it, entail
democratising the commanding heights of the economy, to ensure they are not
legally owned by the state, but that they are thoroughly democratised and
controlled by the people - their workplaces, their management, and
decision-making process.

*Secondly,* nationalisation should be accompanied by thorough transformation
of state-owned enterprises. Much of the existing state-owned enterprises
have much to be democratised and transforming such that they indeed benefit
the people as a whole. In this context, the model of nationalised
enterprises that are command-driven is not attractive to us as does the
existing SOEs corporatist models which tend to operate on similar values and
principles of a private company.

*Thirdly, *nationalisation should help build strategic capacity of the state
to unlock resources for development and growth path that is more inclusive
and equitable. The strategic capacity of the state through public ownership
enables the state to lead other sectors to achieve these broader societal
goals. So as the ANCYL we are not talking of generalised nationalisation,
even of industries that are of no strategic importance. The most strategic
industries, tends out to be largely monopoly industries, but it is debatable
if public ownership should be limited to this sector. For example, the state
may take a lead through public ownership, research and development in
industries that have yet to mature.

*Fourthly, *nationalisation, like its opposite, privatisation, can assume
various forms: it can be 100% public ownership, or 51% or more owned by the
state, or established through partnership arrangements with the private
sector in which the state assume greater control.

*Finally, *depending of the merits of the each case based on "balance of
evidence", nationalisation may involve expropriation with or without
compensation.**

*The Freedom Charter*

The ANC YL's call for nationalisation is premised on the reality that the
ANC's strategic goal is towards attainment of the Freedom Charter's aims and
objectives. The Freedom Charter says that "the people shall share in the
country's wealth", and in order to realise this, "the mineral wealth beneath
the soil, banks and monopoly industries shall be transferred to the
ownership of the people as a whole", whilst "other trade and industry are
controlled for the benefit of all". This is not equivocal, and has practical
relevance in South Africa's current economic conjecture of a dependent
economic development. Dependent in the sense that we are mainly producers of
natural resources, without any substantial capacity or effort to beneficiate
those, so our continued production of natural resources is totally dependent
on the demands of markets elsewhere. Such subjects us to economic problems
whenever there are fluctuations in the markets that consume our primary
commodities.

There are those who misunderstand the intentions of the Freedom Charter
because they either have class interests and prejudices or they genuinely
have not paid detailed attention to both the context and content of the
Freedom Charter. The Charter premises its call for transfer of ownership to
the people as a whole by affirming a clarion call that "The people shall
share in the country's wealth". The transfer of ownership to the people as a
whole is therefore meant to ensure that all people equitably benefit from
the extraction, processing, beneficiation and trade of mineral wealth
beneath the soil. Linked to this, the Charter says that "And all other trade
and industry shall be controlled for the benefit of all". There is neither
nuance nor contradiction in these assertions, and the ANC YL's call for the
State to own, control, extract, process, beneficiate and trade mineral
wealth on behalf of the people is within proper context.

Former ANC President Oliver Tambo said in the 1969 political report to the
National Consultative Conference that, "At the moment there are vast
monopolies whose existence affects the livelihood of large numbers of our
people and whose ownership is in the hands of Europeans only. It is
necessary for monopolies which vitally affect the social wellbeing of our
people such as the mines, the sugar and wine industry to be transferred to
public ownership so that they can be used to uplift the life of all the
people". In his first public address after release from prison, former
President Nelson Mandela said, "nationalization of the mines, banks and
monopoly industry is the policy of the ANC and a change or modification of
our view in this regard is inconceivable". Both Oliver Tambo and Nelson
Mandela played critical role in the consultation for the Freedom Charter and
adoption by the ANC, and they could not be mistaken. There are of course
tactical retreats made in the process, which require a separate discussion
to understand.

A contradictory view which suggests that State's control of mineral rights
and renting to big corporations for exploitation is attainment of the
Freedom Charter is very regressive, and not dissimilar to the view that
suggest that we should retain the status quo. It is total dishonesty to
suggest that the people will share from private control, ownership,
processing and trade of South Africa's mineral wealth. If the status quo is
retained, it will continue to be few corporations (black and white) that
benefit out of multinationals control of South Africa's mineral resources. A
view that suggests that the "transfer to the ownership of the people as a
whole", means that only mineral rights should be transferred to the State is
equally disingenuous. On Economic Transformation, he 2007 ANC 52ND National
Conference resolutions are premised on the view that "Our (ANC's) vision of
the economic transformation takes as its starting point the Freedom
Charter's clarion call that the People Shall Share in the Country's Wealth".
So there is nothing wrong with the call for nationalisation of Mines in line
with the 52nd National Conference resolutions.

*Labour-absorption *

* *

Our call for nationalisation is based on the Freedom Charter, but also on
the fact that such will enhance and harness the State's capacity to create
jobs and open economic opportunities for majority of our people. The State
control, ownership and expansion of our mineral processing and beneficiation
will play a critical role in labour-absorption of many other workers into
the South African economy. Buttressed by a comprehensive social security
strategy, South Africa needs high labour-intensive programmes to decisively
deal with the unemployment and poverty challenges. The ANC's 52nd National
Conference resolutions re-affirm that "the use of natural resources of which
the state is the custodian on behalf of the people, including our minerals,
water, marine resources in a manner that promotes the sustainability and
development of local communities and also realises the economic and social
needs of the whole nation". This requires resolute leadership and decisive
intervention into South Africa strategic economic sectors.

One of South Africa's greatest challenges is its high levels of
unemployment. Added to the low skills reality, the South African economy is
not sufficiently labour-absorptive to the extent that even if the entire
workforce would be skilled, the economy would not absolve all workers into
decent employment. So the creation of various labour absorptive job
opportunities is vital to deal with the unemployment and poverty challenge.
Mining as a critical component of the South African economy should
necessarily be used to expand and industrialise the South African economy in
a more developmental, instead of parasitic mechanism pursued by the current
owners of Mining activities in SA.

* *

*Economic Sovereignty *

Whilst relatively developed, South Africa's economy continues to be largely
dependent on the basis that it relies heavily on the extraction and
exporting of natural resources and importing of finished and consumer goods
and services. For sustainable and durable economic development, South
Africa's primary commodities, i.e. minerals, metals, iron ore, agricultural
products, and energy, have to be demanded by markets outside our control.
This squarely explains the decline of our production and retrenchments in
mines due to the financial crisis which fundamentally affected the bigger
economies, and not of our own making.

For durability, South Africa needs to expand internal capacity to extract,
process, beneficiate and utilise the economic commodities that constitute
the strategic core of the South African economy. It can never be correct
that whenever we speak about economic development, we constantly need to
make assurances to forces beyond our control, elsewhere in the virtual
global market that certain things will not change. Such is a sign of
economic dependence, which has a great potential to undermine South Africa's
political and social independence, autonomy and consequently stability.

The State's control and ownership of Mines will amount to direct
developmental investment into South Africa's economy and significantly
variant from the typical "Foreign Direct Investments", which Susan George
correctly argues "are not devoted to new, job creating investment but to
Mergers and Acquisitions which almost invariably result in job losses".
South Africa is home vital minerals reserves in world, and this includes
Platinum Group Metals (70%), Gold (40%), Manganese (70%), Chromium (70%) and
54 other minerals. Such advantage can never be subjected to the whims and
directives of few investors elsewhere at the expense of local economic
development.

This however does not entail that South Africa should not enter into
strategic partnerships with established Mining corporations. The kind of
partnerships which can be considered in the immediate could include but not
limited to State control of majority shares in all big mining corporations,
whilst allowing the Small and Medium mining houses to privately extract and
trade minerals. Botswana and Namibia present useful archetypes on how South
Africa can approach and practicalise this consideration.

Most reactionary and counter-nationalisation writers base their rejection of
our call on the possible cost of nationalisation to the South African
economy. They employ the cost as a scare tactic meant to frighten the ANC YL
into thinking that nationalisation will cripple the South African economy.
Disgracefully, that is done before a closer examination of what the ANC YL
says on the approach to nationalisation. It is our considered view that the
MPRDA is a correct foundation for the State to move towards control and
ownership of minerals in South Africa. The private mining corporations do
not own Minerals; they own the machinery and technologies that are used to
extract minerals. Minerals are owned by the State on behalf of the people of
South Africa, and the State has a responsibility to ensure that the people
benefit out of these minerals and other natural endowments. The State's
intervention into mining should not disrupt the current mining activities,
but should change ownership, and therefore beneficiaries of South Africa's
mineral wealth.

*State Capacity *

The State capacity to manage enterprises is doubted, often in comparison to
the State's oversight of lack thereof of key State owned enterprises such as
the South African Airways (SAA), ESKOM, SABC and Denel. The comparison is
not fair because in most instances, these have failed due to sheer
criminality, mismanagement and patronage which characterised the most of
these entities and very weak accountability systems. The capacity of the
State to decisively intervene in SAA and ESKOM for instance was inhibited by
lack of proper systems and legislative framework concerning the extent of
interventions the State can make alongside Boards of Directors.

In the management of vital resources such as minerals and Mines, there will
certainly arise a need for strong accountability systems and legislative
guidelines of how Mines are operated, buttressed by strong public
accountability mechanisms. With the lessons derived from SAA, ESKOM, DENEL,
and countries that are in Minerals extraction partnerships, South Africa is
suitably located to could propose a more effective, efficient and durable
mechanism, systems and legislative framework to manage Mines more
efficiently. So the failed cases of SAA and ESKOM should not serve as a
discouragement to the State's control and ownership of Mines, but as a
lesson of what should be done moving forward.

Most of the Black Economic Empowerment (BEE) beneficiaries of The Minerals
and Petroleum Resources Development Act and various Mining Charters are
neither mining experts, nor engineers. An absolute majority of Mines'
shareholders are not mining experts and engineers, and some do not even know
where the actual mining is happening. What shareholders do is put in place
proper systems for the running of mines, yet is the biggest beneficiaries of
mining in South Africa. The South African post democratic administration is
maturing and could be able to own mines and utilise the existent skills and
capacity to ensure that as many people as possible benefit from mining
activities. Majority of South Africa's mining engineers are produced by
South Africa's institutions of higher learning.

There is sufficient capacity amongst people who are currently running Mines
to operate Mines on behalf of the State. Nationalisation does not mean that
the people currently operating private Mining activities will be demolished;
it instead means that ownership will change. With the State as a major
shareholder, then the proceeds of Mineral wealth will be directed towards
development of Mining communities and contribute to the national budget for
other useful expenditures such as education, health, rural development and
beneficiation of these minerals.

*Conclusion*

When ANC YL President Julius Malema made the call for nationalisation of
Mines, he further said that "we are aware the implementation of the Freedom
Charter will not please everyone, but our responsibility and obligation is
to please the majority of our people, so we should not be worried that there
will be problems when the Freedom Charter is implemented". This is definite,
because in a class divided society like South Africa, it is impossible to
reconcile economic interests of various classes, with some strata falling
victim to what Susan George refers to as "the ideological and promotional
work of the right".

*References:*

- George, S, *A Short History of Neo-liberalism, *Conference on Economic
Sovereignty in a Globalising World, march 24-26, 1999.