*2012 ANC National Policy Conference Discussion Document*
** _/Opening to discussion/_
**
***State Intervention in the Mineral Sector (SIMS)*
The ANC Policy Conference Discussion Document called "*State
Intervention in the Mineral Sector*" (SIMS) follows the in-depth study
commissioned by the ANC NEC so as to give the ANC a
scientifically-researched overview of the minerals sector. This report
attempts to develop policies, strategy and interventions that maximise
the growth, development and employment potential embedded in our mineral
resources.
The Minerals Energy Complex or "MEC" is the core of the South African
economy. The MECis by far the largest contributor to South Africa's GDP,
exports, capital formation and employment.
The first half of the SIMS document is a review of the research
undertaken. It gives a detailed overview of the mining industry in SA.
The second half of the document is 25 pages of proposals plus a short
Conclusion, which ends up with the following paragraph, concisely
expressing the motive for the entire document:
/"It is incumbent on our generation to ensure that the current depletion
of our finite mineral assets establishes a competitive industrial
platform for the economic prosperity of future generations."/
*_The Proposals_*
The proposals begin by defining four important objectives, equivalent in
total to the above-quoted sentence, but in more detail, to the length of
one page - page 27. The remainder of the proposals are given under four
headings:
**
*2.1 Proposals on Ownership and Control (3 pages)*
*2.2 Mineral Resources Asset Management Proposals (6 pages)*
*2.3 Proposals for Developing the Mineral Economic Linkages (14 pages)*
*2.4 Proposals to Enhance the Developmental Impact through Regional
Integration (2 pages)*
These proposals run to many numbered, sub-claused and bulleted points,
of which we will only be able to deal with a selection.
*_Ownership and Control_*__
This section lists eight different kinds of possible state intervention,
starting with "Nationalisation of Mining Companies". Concerning
nationalisation, the document points out that nationalisation with
compensation is unaffordable, while nationalisation without compensation
would be "an unmitigated economic disaster for our country and our
people." The section concludes as follows:
/"This study proposes that we rather investigate the desired outcomes of
state control, in terms of rent share, growth and development, and make
targeted interventions to achieve such outcomes."/
The remainder under this heading are: Targeted State Interventions;
Nationalisation of Mineral Assets; State Minerals Company, its special
governance, mandate and ownership; and Aligning State and B-B BEE
Strategies in Mining Companies. All of these are more or less powerful
state interventions, that will bring results.
*_Mineral Resources Asset Management_*__
The first big proposal under this heading is to merge:
/"...the Ministries of Trade and Industry, of Mineral Resources, of
Energy, of Public Enterprises, of Economic Development and of Science
and Technology. The creation of this Super Economic Ministry would be a
vital first step in tackling South Africa's enormous unemployment
challenge, through ensuring that the developmental impacts of our
resources are maximised into upstream and downstream industries, into
energy, into knowledge and into economic development."/
The second major item in this section is mentioned as follows:
/"Unfortunately, although the MPRDA [Minerals & Petroleum Resources
Development Act of 2002] transferred ownership of minerals to the
nation, the known unexploited deposits were subsequently given away for
nothing (ostensibly, on a "first-in-first-assessed" FIFA basis), with no
attempt at maximising the developmental impact and job creation."/
What this means is that the first attempt to nationalise the mineral
resources (not the mining companies) according to the Freedom Charter's
words, was done badly. This matter is referred to again, later in the
document.
*_Developing the Mineral Economic Linkages_*__
Mineral linkage industries can survive beyond the resource exhaustion
and provide the nurseries for more generalised industrialisation and job
creation.
The five most important mineral economic linkages are:
1.Fiscal Linkages
2.Forward Linkages
3.Backward Linkages
4.Knowledge Linkages
5.Spatial Linkages
The document goes through these different kinds of linkages and how
their development potential, over 14 pages of proposals.
The first concerns the major question of "Resource Rent". This is
exceptional profit, or in other words, the difference between the price
at which a resource can be sold and its extraction costs, _including
normal returns_. So, normal returns are not rent, but extra returns over
and above the normal are called resource rent, and are considered a free
bonus which /"consequently should be shared between the people and the
mining company,"/ says the document.
"Forward Linkages" is about "beneficiation" -- the adding of value to
the mineral production, inside the country. There is a great deal of
detail about this in the document.
"Backward Linkages" are about the businesses that supply the mining
companies with all the products and services that they use. In the past
it was these backward linkages that made South Africa into a more
diverse and well-rounded industrial economy. This kind of potential is
still in place. The document says it is "probably the most important
mineral linkage opportunity for us to realise."
"Knowledge Linkages" are about expanding education and training, and
"Spatial Linkages" are about transport, including railways, other
infrastructure, new kinds of mineral and mineral-based opportunities,
and Local Economic Development (LED).
*_Regional Integration_*__
This section details many very large-scale opportunities that are
available in terms of strategic partnerships with regional countries for
sources and markets of energy and minerals.
*_Summary_*
This is a well-prepared and comprehensive document that is thoroughly in
keeping with the industrial-development strategic thinking that was
demanded by the 52^nd ANC National Conference at Polokwane in 2007.
902 words (approximately 9 minutes' reading time)
Original "SIMS" document: 23023 words
------------------------------------------------------------------------
*VC*
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