I commented to Carin Smith at Fin24 on the impact of South Africa’s new mining charter yesterday, in this article.
Economist Chris Becker is of the view that the new Mining Charter will mean that once global commodity prices and demand do eventually recover, South Africa will not benefit as much as it otherwise would have.
Other countries that are making it easier to invest in mining, like Argentina, are therefore likely to outperform SA on this front.
“I also suspect the local procurement law will put the existing mining services industry under tremendous pressure and lead to a shrinkage in this sector, making it even harder for mines to operate in the country,” said Becker.
“A vibrant and competitive mining services and suppliers industry is necessary to keep prices and services competitive and increase ownership, but property rights restrictions in this industry are likely to be a hindrance on this front.”
My fear is that this policy has been telegraphed for many, many months and is firmly in line with the ANC’s policy strategy as communicated in ANC policy conference documents since 2007. This suggests that the redistribution of property with racial quotas will not end with the mines. It’s all about executing the second phase of the National Democratic Revolution.