ANC favors state ownership of mineral rights

South African President Nelson Mandela’s ruling African National Congress (ANC) has called for state ownership to replace private control of the country’s mineral rights.

South Africa is currently the world’s major gold producer and is also a significant producer of platinum, diamonds, coal, titanium and uranium. The ANC’s draft policy document on mineral rights also called for measures to be introduced that would make mineral opportunities available to junior resource companies, and make ownership of the mining industry “more representative” of the people. “The high corporate concentration should be addressed, and measures should be introduced to increase competition,” the document states.

The Draft Mineral and Energy Policy Discussion Document is not yet official government policy, but it indicates the direction in which the ruling party is moving.

The ANC said the state also needed to reassure investors in mining and encourage development.

“A system of mineral licences should be introduced over state-owned mineral rights with defined work periods and commitments,” the document said. “A mineral rights tax should be considered, which would be deductible against any exploration expenditure in the same area, to encourage development.” Under the current system, private companies are allowed to hold mineral rights for an indefinite period without necessarily exploiting their rights. The ANC believes this system discourages small mining operations and foreign investors, and that the proposed mineral rights tax would encourage companies to explore for minerals or turn the rights over to the state, ANC mineral policy co-ordinator Paul Jourdan said.

Representatives from some of the major mining houses have criticized the ANC plan, saying companies would be reluctant to commit the huge amounts of money necessary for the deep-level mining prevalent in South Africa unless they were assured of control of the rights for an extended time period. Lawyers have also expressed doubts that the current constitution would allow the ANC to nationalize mineral rights, as property rights are entrenched.