The Chamber of Mines of South Africa Supports State Owned Mining Company
Bheki Sibiya, Chief Executive - Chamber of Mines of South Africa
The establishment of AEMFC is an act of state participation in the private sector and it is not different from any of the initiatives that have been taken by major economies following the global financial crisis through the bailing out of companies in distress.
In August 2007, South Africa's Central Energy Fund announced the formation of a new state owned mining company, the African Mining Exploration and Finance Company (AEMFC) to provide the state with an active participation in the mining sector.
The company was launched on February 26 this year by President Jacob Zuma in Ogies, Mpumalanga. At the time, some commentators expressed concern that the launching of the company was the first step in the process of nationalizing the country's mines.
In response to enquiries, the Chamber of Mines noted that the formation of the company was the prerogative of the state as the custodian of the country's mineral resources but expressed the hope that it should compete on an equal footing with the private sector companies and not be given special privileges. In this regard, The Chamber was pleased that AEMFC did not fall under the jurisdiction of the Department of Mineral Resources (DMR).
This structure ensured that the DMR would be a regulator but not a player in the mining industry. Towards a Mixed Economy In launching the company, President Jacob Zuma pointed out that the policy of the government was "to build a strong mixed economy, where the state, private sector, co-operative and other forms of social ownership complement each other, to achieve shared and inclusive economic growth."
The Chamber of Mines and its members share the President's objective of a "shared and inclusive economic growth. The many social challenges that we face as a country, including joblessness, skills shortage as well as economic disparities require a collective approach if we are to succeed in our quest for an "inclusive and shared" economic growth.
The world is not short of examples of successful mixed economies. The Nordic countries, Denmark, Finland, Iceland, Norway, and Sweden provide a good example of a successful prosperous economic model with a large participation of the state in the economy.
Debswana in Botswana and Namdeb and DebMarine in Namibia are some of successful mining companies in which the state has participation in Southern Africa. Our support for a state mining company is not sentimental as state participation in mining is not something new. The Chamber of Mines would therefore like to confirm its support for AEMFC.
The reappraisal of successful economic models in the world, following the 2008 global financial crisis, demonstrated that dogmatic alignment with specific and particular economic models does not always yield the requisite results.
Each country needs to follow the route most suited for its needs. We believe that South Africa's choice of a strong "mixed economy, where the state, private sector, co-operative and other forms of social ownership complement each other, to achieve a shared and inclusive economic growth" is the best route for our country.
Therefore, the establishment of AEMFC could be seen as the government's way of strengthening one of the pillars of a mixed economy. Rationale for Support Our support for AEMFC should, however, not be seen as a blanket support for state participation in the private sector. It remains our considered view that the roles of business and government are different and as such efficiencies could only accrue out of playing by the rules.
Therefore, government's participation in the private sector should be in accordance with international best practices of managing an enterprise. In any country, policy clarity and predictability are critical in ensuring stability to enable the development of efficiencies which are critical in ensuring a competitive and growing economy of the country.
Questions may be raised as to why we only declare our support now for the state owned mining company. As the Chamber of Mines, we had viewed the establishment of the company as a matter between itself and its shareholders and therefore followed the same pattern we have followed in the past on the establishment of any other company, as a matter between itself and its shareholders.
However, perceptions that the establishment of AEMFC was some form of nationalization, a policy sentiment that we disagree with, encouraged us to clarify the issues.
The establishment of AEMFC is an act of state participation in the private sector and it is not different from any of the initiatives that have been taken by major economies following the global financial crisis through the bailing out of companies in distress.
We however believe that the best way that AEMFC can demonstrate its intensions to operate on the same basis as privately owned mining companies would be by joining the Chamber of Mines as a member. We look forward to welcoming AEMFC as a member once they have so decided.
