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South Africa Pushes Wider State Mining Role

         Date: 2012-10-24

           Tag: South Africa, South Africa Mining

Summary: South Africa's state-owned mining company should play a bigger role as the country comes to grips with a wave of strikes that have crippled the industry, its minister of natural resources said Tuesd…

South Africa's state-owned mining company should play a bigger role as the country comes to grips with a wave of strikes that have crippled the industry, its minister of natural resources said Tuesday.

Susan Shabangu's call for greater state involvement in the mining sector through the state mining company comes as thousands of miners strike for better wages, and underscores how economic and political problems caused by the strikes could reshape the industry in the long term.

Ms. Shabangu said state mining company African Exploration Mining & Finance Corp. is still in its infancy, but will grow and have a greater presence, though it won't replace private mining companies.

She didn't give further details. In the past she has said the state company could develop projects on its own or do joint ventures with private companies. It is currently developing a coal mine.

"In light of what's going on, it needs to take a much more prominent role," she said on the sidelines of a bilateral South Africa-Congo meeting. "It's also important for us to reflect on the future and the empowerment of workers," she said. "We cannot continue to be stuck in systems of the past."

The political pressure on the ANC over the strikes means "nationalization will again rear its head," said Nomura equity analyst Peter Attard Montalto. If the government stops short of nationalization, "the issue will be what comes in its place," he said.

ANC spokesman Jackson Mthembu said this month that full-scale nationalization isn't an option that will be considered at the December meeting.

The ANC conference could embrace adding more taxes on mining companies, as was recommended in a policy discussion document released earlier in the year, Mr. Montalto said.

Mining companies have started to dismiss workers striking illegally, as wage talks have failed to resolve the disputes. Recently, Anglo American Platinum Ltd. AMS.JO -2.36%fired 12,000 workers and Gold Fields Ltd. GFI.JO +0.58%dismissed 1,500 employees after a wildcat strike shut mining operations for weeks.

None of the 8,500 workers on strike at Gold Fields' KDC East mine had returned to work by the Tuesday afternoon deadline, and they have been "effectively dismissed," a spokesman for the company said. He said the miners have until Wednesday afternoon to appeal the decision to Gold Fields management.

Workers at Harmony Gold and AngloGold Ashanti Ltd. ANG.JO +0.66%also face dismissal if they don't return to work in the coming days.

"Mass dismissals will have a negative impact on the country. We really urge mining companies to review and look at that decision," Ms. Shabangu said. "The strikes in general are bad for our economy and we cannot afford them, but we also cannot afford to add to our unemployment," she said.

Strikes have spilled beyond the mining sector. On Tuesday, the National Union of Metalworkers of South Africa said that workers at a factory run by the South African branch of Goodyear Tire GT -1.91%went on strike over a pay dispute.


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