Nationalisation will cripple SA
SUSPENDED ANCYL leader Julius Malema suffered yet another political blow as an ANC commissioned report rejects nationalisation of mines, saying the move could lead to "economic disaster" for South Africa and its citizens.
The confidential draft report prepared for the ANC and seen exclusively by Sunday World says, among other things, nationalisation will be "unaffordable" and can leave the South African government bankrupt.
It is understood that the report was discussed at an ANC national executive committee meeting on Friday.
The report says nationalisation without compensation is unconstitutional and will require constitutional change.
"Nationalisation without compensation would require a constitutional change and would result in a near collapse of foreign investment and access to finance, as well as widespread litigation by foreign investors domiciled in the states that we have trade and investment agreement with, which would ultimately likely result in the payment of compensation, all the same.
"This route would clearly be an unmitigated economic disaster for our country and our people," says the report, which also suggests that the ANC "rather investigate the desired outcomes of state control ... and make targeted interventions to achieve such outcomes."
According to the financial estimates contained in the report, if government took over 100% of all listed mining companies, it would cost it well over R1trn, while the cost to acquire a 51% controlling share of listed companies will be around R500bn.
"This exceeds the entire government budget, which is expected to exceed R1trn for the first time in 2012/13.
"Consequently either complete nationalisation or 51% would be totally unaffordable and could put our country into a situation where we lose fiscal sovereignty and have to follow the dictates of the Bretton Woods institution under a Structural Adjustment Programme which would be untenable."
The report says the constitution allows for nationalisation for a public purpose but requires compensation for the expropriation at the market value of such a property.
The ANC asked a team of specialists consisting of Professor Pundy Pillay, a lecturer at the University of the Witwatersrand, independent researcher Paul Jordaan and Margaret Chitiga-Mabugu of the Human Sciences Research Council to look at how the state can intervene in the minerals sector.
This was after the ANC Youth League had made calls for nationalisation of mines.
Malema had himself - after his suspension from the ANC - wrote in this newspaper that "nationalisation of mines and expropriation of land without compensation will be policy outcomes of the ANC 53rd national conference."
The team visited several countries, including Botswana, Australia, Chile, Namibia, Finland, Norway, China and Brazil, and hosted stakeholder workshops and undertook its own research.
This followed a decision taken by the ANC at its national general council in 2010 that the party undertakes research into the best method the party could apply if it was to intervene in the country's mineral wealth to achieve its goal of job creation.
The report will be tabled at the ANC national policy conference in June before being referred to its December conference for adoption.
The youth league was insisting on nationalisation without compensation, something the report says would force mine owners to take government to the Trade and Agreement Court.
This is an international court that has heard a number of cases relating to government taking over assets without compensation.
In some instances it rules in favour of governments.