South African ruling party youth league president Julius Malema has reiterated the call for the nationalisation of industries inside the country., a photo by Pan-African News Wire File Photos on Flickr.
South Africa Mines Nationalization Talk May Cut Output, Impala CEO Says
By Carli Lourens - Jun 28, 2011
Bloomberg News
South African mine production may drop as foreign investors get “cold feet” following a call from the youth wing of the ruling African National Congress to nationalize the industry, Impala Platinum Holdings Ltd. (IMP) said.
“There is definite worry around this particular topic” among European and U.S. investors, David Brown, chief executive officer of Johannesburg-based Impala, said in a speech in the city yesterday. Impala is the world’s second-largest producer of platinum, accounting for a quarter of global output.
“Investors, the traditional suppliers of risk capital to this industry, are getting cold feet,” Brown, 48, said. “The risk associated with future investment in South African mining has increased considerably as seen from the outside world” because of nationalization and other concerns, he said.
The ANC agreed in September to study nationalization following demands from Julius Malema, leader of the party’s youth arm. South Africa is the biggest producer of platinum, used in devices to cut vehicle emissions and in jewelry. It also mines coal, gold and chrome.
Malema, 30, said last week the government should also take control of lenders such as Standard Bank Group Ltd. and Nedbank Group Ltd. He wants to increase the role of the state in the economy to combat youth unemployment, poverty and inequality.
“One of things we will see as it begins to flow through is in terms of hampering future investment decisions,” Brown said of the nationalization debate. “If we’re going to start impacting the flow of investment, then I think we’ll see some significant issues around declining output from South Africa.”
‘No Answer’
South Africa’s Chamber of Mines started lobbying ANC members for their support against mining nationalization, Business Day, a Johannesburg-based newspaper, reported yesterday, citing the chamber. Business should have spoken out on the issue sooner, Bobby Godsell, AngloGold Ashanti Ltd. (ANG)’s former CEO, said last week, according to a June 26 report by Sake24.com.
“Nationalization is not the answer,” Brown said. “Wholesale nationalization would certainly undermine the country’s economic base, especially if banks and land are next,” Brown said.
Brown said that while he doesn’t foresee “classical nationalization,” even partial privatization could lead “a severe reduction in output.”
Anglo American Platinum Ltd., which is based in Johannesburg, is the world’s largest producer of the metal.
To contact the reporter on this story: Carli Lourens in Johannesburg at clourens@bloomberg.net
To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net
No comments:
Post a Comment