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Viewing cable 10PRETORIA316, Minerals Minister Says No Mine Nationalization for South

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Reference ID Created Released Classification Origin
10PRETORIA316 2010-02-16 13:44 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Pretoria
VZCZCXRO4476
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHSA #0316/01 0471344
ZNR UUUUU ZZH
R 161344Z FEB 10
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 1248
INFO RUCPDC/DEPT OF COMMERCE WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUEHC/DEPT OF LABOR WASHDC
RUEHAK/AMEMBASSY ANKARA 0231
RUEHBJ/AMEMBASSY BEIJING 1083
RUEHBY/AMEMBASSY CANBERRA 0903
RUEHLO/AMEMBASSY LONDON 1853
RUEHMO/AMEMBASSY MOSCOW 1087
RUEHNE/AMEMBASSY NEW DELHI 0657
RUEHOT/AMEMBASSY OTTAWA 0863
RUEHFR/AMEMBASSY PARIS 1691
RUEHSG/AMEMBASSY SANTIAGO 0020
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHZO/AFRICAN UNION COLLECTIVE
UNCLAS SECTION 01 OF 02 PRETORIA 000316 
 
SIPDIS 
SENSITIVE 
 
STATE PLEASE PASS USAID 
STATE PLEASE PASS USGS 
DEPT FOR AF/S, EEB/ESC AND CBA 
DOE FOR SPERL AND PERSON 
DOC FOR ITA/DIEMOND 
 
E.O.   12958: N/A 
TAGS: EMIN ELAB ENRG EINV PGOV SF
SUBJECT:  Minerals Minister Says No Mine Nationalization for South 
Africa 
 
REF: 09 PRETORIA 393 
 
This cable is not for Internet distribution. 
 
1.  (SBU) Summary: South African Minister of Mineral Resources Susan 
Shabangu stated publicly and clearly that nationalization of the 
country's mines is not government policy and is not on the 
government's agenda, speaking at the opening of the Africa Mining 
Indaba in Cape Town on February 2.  She was responding to repeated 
calls for nationalization of the mines from African National 
Congress  Youth League (ANCYL) President Julius Malema, who 
stridently criticized the Minister's announcement.  Many SAG 
officials have confirmed that nationalization is not government 
policy, but allowed that there could be a debate in the future.  The 
Minister's emphatic statement of policy was positively received by 
the mining community, which has a number of challenges to deal with 
in South Africa, including power, safety, mature geology, labor, and 
black economic empowerment and transformation.  Despite its 
political overtones and lack of backing in facts, the sustained 
carping from ANCYL about mine nationalization continues to worry 
some would-be investors in the mining sector as a political risk. 
End Summary. 
 
------------------------------------- 
Mining Indaba - Minister Emphatically 
Counters Calls for Nationalization 
------------------------------------- 
 
2.  (SBU) In a press conference at the opening of the Africa Mining 
Indaba (conference) in Cape Town on February 2, Minister of Mineral 
Resources Susan Shabangu stated clearly that nationalization of the 
mines in South Africa is neither government policy nor on the 
government's agenda.  She said, "I can say in my lifetime there will 
be no nationalization.  Maybe when I am dead and rest assured I'm 
not dying next week."  Over the last few months, President Jacob 
Zuma and Deputy President Kgalema Motlanthe have said there will be 
no change in the country's policy and nationalization is not in the 
cards.  Chamber of Mines Economist Roger Baxter told Minerals/Energy 
Officer that government policy was clear that nationalization was 
not viable.  Mining executives in general have dismissed the calls 
for nationalization as hot air.  Even the SA Communist Party called 
the proposal inappropriate for the country's state of development. 
In a presentation at an Eskom power plant, Deputy Minister of Public 
Enterprises Enoch Godongwana was dismissive of the reaction to the 
calls for nationalization.  He said, "The debate has been going on 
for my lifetime, why should it scare investors now?" 
 
3.  (SBU) ANC Youth League President Julius Malema has been 
stridently beating the drum for nationalization of mines for months. 
 Minister Shabangu apparently aimed to give a clear and emphatic 
response to quiet concern on the issue.  The ANCYL nastily escalated 
the row by saying Shabangu did not understand the ANC and accusing 
her of lying.  The ANCYL said Shabangu should stop "misleading 
Qher of lying.  The ANCYL said Shabangu should stop "misleading 
investors" and "sucking up to monopoly capital", and questioned her 
fitness for office.  Malema also criticized De Beers Chairperson 
Nicky Oppenheimer, who dismissed the call for nationalization. 
Malema said it is up to the ANC "to take from his (Oppenheimer's) 
family what belongs to the people of South Africa."  (Comment:  The 
ANC leadership lets the ANCYL freely attack targets with gusto and 
without care for facts, thereby letting off political steam.  End 
Comment.)  The row appeared to quiet down in the press as reports of 
President Zuma's latest offspring took over media space. 
 
4.  (SBU) Speaking on the margins of the Indaba, Department of 
Minerals Resources Deputy Director General Jacinto Rocha stated that 
government and ANC policy documents are clear in not supporting 
nationalization.  However, he allowed that there could be a debate 
about nationalization at the next ANC policy conference in 2012. 
Cutting the ANCYL some slack, Rocha noted that "youngsters" are 
idealists and older people are pragmatists.  Rocha went on to say 
 
PRETORIA 00000316  002 OF 002 
 
 
that democracy and nationalization do not fit together.  He 
emphasized that "a mine is not part of the national patrimony; a 
mine is private property, which is why the concept of 
nationalization would have to be thoroughly analyzed and a decision 
ultimately made on its feasibility, following correct legal routes." 
 (NOTE: On February 4, Jacinta Rocha announced that he was stepping 
down from his position after 13 years.  End Note.) 
 
---------------------------------------- 
Mining Charter and Constructive Approach 
---------------------------------------- 
 
5.  (SBU) Shabangu's speech at the opening of the Mining Indaba was 
perceived by the mining industry as constructive and consultative. 
This contrasted with the tough tone she took when she first took 
office, when she laid into the mining industry for its failure to 
live up to the spirit and intent of the mining charter, as well as a 
failure to achieve transformation in the sector.  At the Indaba, 
Shabangu promised to consult with industry in reviewing the Mining 
Charter and establishing related codes of conduct.  She promised to 
halve the time it takes to grant a mining license to six months and 
a prospecting license to three months.  The Minister appeared to be 
signaling a concern about the industry's growth and expansion, along 
with her traditional concern about transformation (to support 
development in the country). 
 
6.  (SBU) COMMENT: It is not clear what drives the ANCYL's obsession 
with nationalization of mines.  The Government has been cautious in 
its response, ultimately stating that nationalization does not make 
any sense or have any basis in policy or law.  However, some foreign 
investors remain concerned and do not necessarily distinguish 
between serious proposals, debate, and hot air.  The Mineral 
Resource Department's tardiness in processing license applications 
during the conversion to the new Minerals and Petroleum Resources 
Development Act has been cited as a factor that undermined South 
Africa's ability to take full advantage of the commodities boom. 
Other challenges that impede new mining investment in South Africa 
are worries about power, safety, labor, water, transformation, 
requirements for domestic beneficiation, and black economic 
empowerment, as well as increasingly deep and mature geology and 
reserves. 
 
GIPS