Nationalisation is highly unlikely to be implemented in South Africa, Chamber of Mines (CoM) CEO Bheki Sibiya said on Thursday.

Speaking at a junior coal conference in Johannesburg, he said that the majority of shareholding in South African mines was foreign and that these investments enjoyed bilateral investment protection.

Sibiya also said that the country should not be scared by the nationalisation talk. “We should rather understand the cause for the call of nationalisation such as poverty, and resolve these problems.

“Nationalisation is the wrong medicine to a correct diagnosis and South African institutions such as the Chamber, the South African Mining Association and emerging miners need to work together and defeat the nationalisation debate,” he added.

Sibiya said that should the resolution to nationalise mines be taken, there were two scenarios that the government and industry would have to consider. “Will the nationalisation be implemented with or without compensation? Firstly, government does not have the resources to compensate and the resources it has will run dry very quickly.”

Sibiya explained if nationalisation were implemented without compensation, funding for the mines would be taken from pension funds, which would have a “devastating effect” on the economy. “We are communicating this message to the more sensible members in the governing party.”

The CoM believed that the mining industry already faced big challenges, which nationalisation would aggravate.

“When we look at State-owned enterprises, we see that these are already not well lead or guided and nationalisation will add a mammoth task to government. Transnet is not delivering the transport service industry needs, Eskom is limping as it does and infrastructure in the country is backwards,” Sibiya said.

“This is also a constitutional challenge. The African National Congress Youth League states that the Freedom Charter calls for nationalisation, but as National Union of Mineworkers general secretary Frans Baleni says, the Mineral and Petroleum Resources Development Act has already transferred mining rights to the state,” he said.

However, Sibiya believed that the government and industry have not implemented the mining charter as diligently as it should. “And this is another challenge we need to overcome,” he added.

“Nationalisation is a foolishness that has been done in other countries. Ten, 20 years later those countries had to reverse nationalisation, as it failed, at great costs to the country, economy and citizens of those countries.

“We need to implement black economic empowerment vertically and horizontally in every single mine in South Africa, and ensure that there is truly broad-based wealth distribution in the country.”