EDITORIAL PAGE — Opportunity and South Africa

The success of junior mining companies in Canada and Australia has not gone unnoticed by the African National Congress (ANC), the ruling party of South Africa. Nor does ANC appear to be unaware of the prevailing investment climate and the stiff competition that has emerged worldwide for mineral exploration and development funds.

These factors are afforded mention in a 61-page document which ANC views as a starting point for developing a new minerals and energy policy. The document begins by reaffirming South Africa’s exceptional mineral endowment. It also confirms that mining has made a major contribution in crucial areas, such as foreign exchange earnings, state revenue and unemployment. But the platitudes stop there. In the next breath, ANC charges that in the past, “the exploitation of these vast mineral resources mainly went to the betterment of a small white minority.” The document also states that the past decade was one of “missed opportunities,” because of apartheid and the subsequent isolation of the country by the international community. It would be foolish to argue against these statements, even though views may differ as to why and how such events came about. What matters now is that South Africa has embarked upon a different course, one aimed at opening the doors of opportunity to all South Africans. The debate is not about whether social progress should be strived for but, rather, how best to achieve it. The mining industry is a case in point. The ANC discussion document outlines a number of new policy directions, many of which are positive: better environmental standards; encouraging value-added before export; a tax regime to encourage domestic and foreign investment; and a call for the state to be more supportive of mineral development, “as in Quebec and South Australia.” The document also tackles the issue of ownership of mineral rights. It advocates that they be returned to the state and that a system of mineral licences be introduced with defined work periods and commitments. ANC argues that South Africa’s current system of private ownership is no longer the international norm, as it tends to freeze up prospective mineral terrains. As might be expected, some major companies are not keen on this proposal, citing the high costs incurred to mine and develop South Africa’s deep mines. But, as might also be expected, some companies in Canada (and elsewhere) might take a contrary view. Many would agree with the ANC conclusion that South Africa’s mining industry would blossom if more ground became available through policy changes. This in turn would attract junior exploration companies and new technologies.

The most controversial element of the ANC discussion paper is the view that ownership and control of the mining industry should be “more representative” of the South African populace. The challenge will be to find ways to strive towards this goal by means other than nationalization and state-owned mining enterprises. Such measures would lead to an investment chill President Nelson Mandela can ill afford, given his election promise of a brighter future for the country’s black majority (a promise which hinges on increased investment from the private sector).

The ANC has promised, however, “to pursue an open and transparent policy formation process” and is welcoming suggestions, comments and amendments from all stakeholders. It will be up to the industry to take part in this process, to be socially progressive, and to show that free enterprise can play a leading role in South Africa’s economic renaissance.