Friday, February 19, 2010

Malemization of the mines

Yesterday Julius Malema again called for the nationalization of the South African mines. This proposal has polarized people across the political spectrum. Yet a close reading of the statutes currently regulating minerals in South Africa shows that Malema could probably achieve most of his goals without even changing the law.

The Mineral and Petroleum Resources Development Act (MPRDA) is the statute that currently regulates mining in South Africa. It has provisions that in almost any other country would probably be called nationalization. Section 3 of the MPRDA states:

3. (1) Mineral and petroleum resources are the common heritage of all the people of South Africa and the State is the custodian thereof for the benefit of all South Africans.
(3) The Minister must ensure the sustainable development of South Africa’s mineral and petroleum resources within a framework of national environmental policy, norms and standards while promoting economic and social development.

The exact implications of section 3 are unclear. However, a few things are clear:
  1. Whoever owns the minerals and the mines has an obligation to the people of South Africa to ensure that those minerals are extracted for the benefit of South Africans.
  2. The State has an important role to play in ensuring that mineral wealth is equitably distributed in light of social and economic purposes.

Section 3 makes a more subtle point. It shows that the people of South Africa are to be the beneficiaries of the mineral wealth rather than the South African government. People often conflate the interests of South Africans with the interests of the government.

If you keep reading the MPRDA you will immediately notice that all of the provisions relating to the award of minerals rights and licenses include extensive provisions protecting the public interest. These include ensuring that the environment is taken care of, local communities benefit from mining developments and companies pay very large royalties to the state.

Ultimately, what matters to the people of South Africa is not whether they own the mines or the minerals. What matters is how much wealth is generated by the mines and whether that wealth is spread equitably between the people of South Africa. This distribution can take place through employment, welfare grants, public works or other measures.

The MPRDA already allows for the State to ensure that both of these considerations are given effect. Companies that are granted mining rights may only mine if it benefits South Africa.

However, Malema persists in calling for nationalisation rather than working within the existing framework. There are a few possible reasons this may be the case. It may be that the existing framework genuinely doesn’t work as well as nationalization. This may be the case but I haven’t seen any reporting on the substantiation of this point. The ANC Youth League’s policy document seems to reason as follows: South Africa has failed to achieve certain objects thus the MPRDA is at fault. This claim is not substantiated. Often the failure to achieve the objects the ANCYL wishes to achieve stem from government not placing proper conditions on the extraction of the minerals rather than on the framework created by the MPRDA.

However, I have a suspicion that Malema’s commitment may simply be because calling for nationalisation has greater rhetorical force than working within an existing framework. Or Malema has, without proper consideration of the existing framework, proposed an alternative and pride now keeps him from considering less radical approaches.


  1. I have a suspicion that your having a suspicion may itself be the product of having a suspicion's rhetorical force being greater than not having a suspicion's.

  2. Thanks Anthony. Glad to see you're reading the blog. Every blog needs a troll.