Amidst apparent disagreement in his cabinet about mining policy, President Jacob Zuma needs to step in and provide leadership so that potential mining investors have certainty about South Africa’s mining policy.

Mineral Resources Minister, Ngoako Ramatlhodi’s, reopening last week of the debate about developmental pricing has caused great concern in the mining industry. The whole industry seems perplexed by his indication that government was still considering the designation of strategic minerals as part of its developmental pricing policy. This comes at a time when President Zuma has just sent the MPRDA bill back to parliament out of fear that this very policy would put South Africa in violation of GATT and thus in violation of our own constitution.

It seems the remarks by the Minister indicate two things:

• There is confusion in government as to where mineral policy stands after the bill was sent back to parliament for reconsideration;
• There is fierce contestation in government over what mining policy should be.

It is difficult to work out exactly which policy makers are on which side. There has been one report that Trade and Industry Minister, Rob Davies, is pushing the developmental pricing idea despite its apparent unconstitutionality, because it fits in with his idea of economic growth through beneficiation.

Like all statist ideas, Davies’ attempts to micromanage economic policy are doomed to fail. No government ever succeeds in second-guessing the markets, and there’s a high risk of unintended consequences.

In this case developmental pricing will make mining pay the costs of subsidies for industrial projects. Manufacturing may grow but mining will shrink.

The DA calls on President Zuma to back his mining Minister or any voices that are trying to allow for the conditions under which mining can be assured that it is safe to invest. Investments in mining will give South Africa jobs, foreign exchange and tax revenues.

 

Issued by DA