CARLI LOURENS
THREATS of nationalisation are less of a risk to mining companies in SA, the biggest platinum, ferrochrome and manganese producer, than the lack of power in the country, says consulting company Control Risks .
“We’re very sanguine about political risk in SA,” James Smither, associate director for consulting projects, said in an interview at the Mining Indaba conference in Cape Town yesterday. “The real risks mining companies should be focusing on in the country are, number one, the infrastructure, especially power availability.”
The leader of the African National Congress’s Youth League, Julius Malema, is pushing the party to seize mine assets to broaden the distribution of wealth in the country. The league wants the government to own at least 60% of mines, create a state- owned mining company and halt issuing of new mining licences until legislation is amended.
But SA will not nationalise mines “in my lifetime”, Mines Minister said at the conference on Tuesday.
Eskom Holdings , the state- owned power utility, is struggling to fund a R426bn expansion aimed at avoiding a repetition of blackouts that dragged on the economy in 2008. It has applied for permission to raise power prices an annual 35% over the next three years.
Meanwhile, Smither said political risks in neighbouring Zimbabwe, which has the world’s second-largest reserves of platinum-related metal, are too high to develop mines.
“We don’t think the time is dead right to jump into Zimbabwe,” he said. Potential is “huge” but “the political transition is ongoing rather than complete,” Smither said.
Rifts remain in the power- sharing government created last year by the former ruling Zanu (PF) party and two factions of the opposition Movement for Democratic Change in a bid to end a decade of economic and political crises.
“The managed exit of the current administration from Zanu (PF) is certainly a prerequisite for really entrenched political stability.”
Boubacar Bocoum, a senior mining specialist at the World Bank, said in a separate interview at the conference that while “a lot of companies are positioning” to invest in Zimbabwe, it is probably not yet the right time. Bloomberg