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Mines are the Jewles of our economy
Recently I addressed a meeting of young people from over 20 schools who were in a Debating Competition on the TOPIC: "The NDR and Nationalisation". I initially thought that the TOPIC was too political and not relevant, but wait until you hear the corresponding questions. These were the brightest of minds, and asserted that no one should undermine the energy and zeal the youth have and their commitment towards ensuring that they grasp and take charge of the moment and their future. These where young students between the ages of 14 and 18 (from Grade 8-12) who were debating amongst each other, chosen from black schools around Gauteng. I was impressed with the quality of the questions and thus we are reproducing the Q&A here as The Bottomline. Enjoy! Question: Why Nationalise Mines? Answer: Any country needs not only political sovereignty, but also economic sovereignty. As the YCL, we view the mining sector as key towards building the economic sovereignty of South Africa. Our economy is vulnerable to, for instance, currency volatility, structural unemployment, stagnant growth and dependence on the export of raw materials and import of finished goods. It is an unstable economic path that is yet to attain its independence. The ownership of mines, as a key sector of the economy, can guarantee this economic independence. It will shape the identity (from production and exporting of raw materials to value-add into these raw materials) of our economy, develop the productive capacity (skills development and employment, for instance), and broaden ownership. Mines are the jewels of our economy. Q: How do you propose that this take place? Does government has money to pay-out the current owners? A: The value of the mining sector is more than $250 trillion, we do not have this money. But there are still huge reserves of raw materials. More than 70% of the Platinum Group of Metals (PMG), more than 80% of Manganese, SA is second in the world in terms of gold and its reserves; and we are still abundant with other significant minerals, some of which we already beneficiate (coal, steel and platinum, for instance). All of these present an opportunity to ensure, for instance, that a state owned mining company that will consolidate ownership of all of these on behalf of the people as the custodian. This is why we support the call for a State Owned Mining Company. The proceeds are not just about the social impacts, but equally about the independence of our economy and guaranteed productivity. The social impact on areas like education, healthcare, poverty eradication etc are not the only problems as a result of resource availability ( the lack thereof to be precise) , but its equally about the redistribution function and capacity of the state. They also have to do with the fiscal priorities that government identifies, and not whether we have the money or NOT. So we should not nationalise because we need to finance education, health and other factors, but because we want to build sustainability and economic independence. Q: But how can we nationalise mines when the state is failing to manage companies such as SAA and Eskom? Are we not putting an extra burden on the state, instead of ensuring that it has the capacity to manage the current parastatals? Answer: We have capacity already in the mining sector. When we say nationalise the mines, we do not mean that we should overhaul the entire system. In any case, some of the people who own the mines have absolutely no idea on the actual running of the mines. The other problem is that there is a narrow approach in terms of determining the efficiency or lack thereof of publicly owned entities, basing their success on profits without consideration of factors such as conditions of employment, quality of service, nature of governance (in many instance being democratic and inclusive of the people), access to the services provided to the majority of our people. This is the role of publicly owned companies. The idea that what is privately owned is successful is devoid of all these factors. If we, for instance, look into mining companies such as Aurora, they have dismally failed even in capitalist standards. Q: But why do we want to nationalise the mines? Is this not some form of socialism vs capitalism? Has socialism not failed in Russia? A: This is not about socialism vs capitalism. In fact, some of the historically and traditionally capitalist economies, such as Britain, the main drivers of the economy where and still are national companies. National (state) ownership has always been critical in addressing the ability of the market to provide certain goods and services. When these became profitable, many of the governments, especially during the tenure of Margret Thatcher, became privatised in the name of cutting social expenditure. The value added by any nationalised company should not merely be about their profitability, which sometimes ends up in the pockets of individuals, but on the quality and accessibility of the services. Socialism, or rather, the leadership of socialist Russia, failed an ideal economic system whose values were of solidarity, co-operation and collective prosperity. But has capitalism itself succeeded? I answer with a resounding NO. We see daily massive poverty, unemployment, hunger, inhumane services and conditions of living; all of this parallel to opulence. Capitalism may have over-succeeded with some individuals, but it has virtually collapsed when it comes to the majority of our people. All of these are as a result of the immoral values of greed and competition fostered by a capitalist system. We need a humane society wherein we should all have food security, shelter, education, basic healthcare, sports facilities and many others so that we are able to fully enjoy our time as youth. If this is socialism, then you should be a socialist. Q: There are people who suggest that the call for nationalisation is aimed at paying out mine owners who are in trouble as it happened in the US when they bought banks that were in a crisis. How true is this? This is not the case, at least with the kind of nationalisation that we are calling for. In fact, our view is that true and radical nationalisation should never include compensation, but should be the expropriation of mineral resources for the benefit of all the people, with the state as the custodian. This will require more than mere rhetoric, it may even include violence as the state and private securities may be on the one side defending the right of people to retain their property. It will have dire consequences, but that is the real radical and revolutionary nationalisation. What is even more important is that such expropriation does not lead to workers owning such mineral resources instead of the state and some public private partnership. It will be unfortunate if some of the people who support the call for nationalisation are mainly intended at "bailing out" as it is being suggested. Q: We see daily service delivery protests. Should government not concentrate on these rather than ownership of mines? A: But in order for government to address all of these it should increase its national fiscus. Without sufficient resources within the budget, government will never meet all the demands of our people. One of the reasons why we remain proponents of nationalisation is due to the social impact this will have on our society. In fact, one of the reasons why people have gone out to protests has been because of unemployment. We believe that if exploited to its full capacity, the mining sector can absorb many people into its employment and thus transform the lives of many South Africans. This can be done through optimum use of mineral resources. We talk of needed infrastructure. We talk of building a South African car. All of these can be attained if we have access to affordable raw materials. Q: You seem to mainly be concerned about OWNERSHIP, but there is Black Economic Empowerment. Also, other people do OWN these mines as their constitutional right, why take it from them? A: When you say people OWN the mines, how did they get to own these mines? Clearly no one was born with a mine. There were huge battles of dispossession as part of the primitive accumulation within our economy. All of this led to skewed ownership favouring white people. Thus, ownership of the mining sector and the economy in general, is mainly white. Blacks in general and Africans in particular are excluded from this economy-hence at some point there was the notion of two economies, the first and second economy representing the two contrasts. The NDR is about liberation of this group or class of people from economic and political bondage. The value of the mining sector, as I said earlier, in SA is more than $250 Trillion. This is significant portion of our GDP. The sector also constitutes more than 30% of ownership in the JSE. Three of the Top 10 companies in the JSE are mining companies. It contributes more than 500 000 direct and another 500 000 indirect jobs. Almost all sectors of the economy, including the financial sector, have some bearing on mining. We cannot leave this sector in the hands of few individuals who continue to profit form it. It will be obviously be impossible for anyone who wants to own the mines to afford such exorbitant amounts. There are people who have taken shareholding in mines as part of the BEE, but many of these are yet to see a cent from their investments. For true empowerment, the state has to intervene not only through legislation, but also through resources in order to broaden ownership of mineral resources. BEE has failed to ensure that this and many other sectors are owned by black people. In cases where there has been black ownership, it has been subjected to "Zama Zama lottery", where only the lucky and connected gets shares. For us, it is better if the state plays its rightful role as the custodian of the people and hold public resources in a trust on behalf of all of us to ensure that it strengthens its redistributive function to ensure that these are beneficiary for all of us. The constitution means nothing if it protects those who have, and forgets completely about those who do not have. This is a critical challenge that we have to deal with. Finally, nationalisation of mines means nothing outside the ownership and control of the financial sector, which is one of the most "transformation resistant" sectors. Although I may not quantify their interests in the mining sector, but be assured that the majority of BEE deals where financed through the finance sector. Buti Manamela