The mining licensing process, controlled by the government, would be the best way to implement the nationalisation of mines in South Africa as sought by the ANC Youth League, its president Julius Malema said yesterday.
Speaking at the Mining for Change conference in Johannesburg, Malema raised the spectre of the government seizing the country's mines but left unaddressed the question of compensation and how the process would be carried out.
Yesterday's conference was the first time that Malema has had an opportunity to address a high-profile gathering of mining industry captains on this controversial issue.
Until recently, he has tended to shout from the sidelines. If his presence at the conference is any sign, Malema now appears willing to engage with the industry directly.
Recently, he had the opportunity to address Parliament's portfolio committee on mineral resources on the issue.
Malema said a proposed state mining company should take 60 percent ownership in any mining entity that had its mining rights due for renewal.
Mining law expert Peter Leon, of Webber Wentzel Attorneys, said the proposal would mean that South Africa, where 460 000 people are employed in mining, would have to kiss investors goodbye.
He said this amounted to indirect expropriation and would dry up investment in the sector.
"Would you expect investors to hold 40 percent of the rights and still comply with BEE (black economic empowerment)?" he wondered.
Leon said there was no precedent for the proposed shareholding seizure.
"In some countries in Africa the maximum I know of the free interest, which is what the youth league is proposing, is 15 percent. I am aware of 10 percent in some countries and some investors can live with that," he noted.
He cited Botswana as one country that had totally annulled the free interest.
"There is no norm for it except in socialist economies. We don't have a socialist economy, we have a mixed economy," Leon said.
He said investors would have to be compensated for the secondary investment they made in infrastructure and equipment.
He conceded that the ANC Youth League was being smart about not sounding as if it was proposing direct expropriation by allowing the rights tenure to run its course before the rights reverted to the state.
"There are all sorts of issues. What about the capital that has been invested?" he asked.
He said the continued talk and issues surrounding mining split the investor perception of the country.
"People are worried about what is going on here," he said.
Malema acknowledged that the nationalisation of mines was not ANC policy but said it was in the Freedom Charter.
The document, adopted in 1955, was a statement of core principles held by the ANC and its allies.
Nationalisation is among the various issues that the ANC will take up for discussion at the ruling party's national general council in two weeks.
"Through tax alone, the government has failed to address the problems of service delivery. We need extra income to increase the fiscus and it is beneath the soil of South Africa," Malema said.
"People talk about socialising the mining sector. How can you socialise that which you don't own? After that, we are going to sit down with our progressive economists and ask: which is the best model of nationalisation that we should adopt?" he asked.
According to the Mineral and Petroleum Resources Development Act, a prospecting right may not be given for longer than five years; a mining right may not exceed 30 years; and a mining permit may not last longer than two years.