Feasibility of Nationalising South African Mines

Topics: Nationalization, Mining, South Africa Pages: 7 (2378 words) Published: April 27, 2011
Sipanera, J.N. 209005715


Module: ECO 301
Lecturer: Prof Wait
Date: 20 April 2011
Table of contents


The South African government has the duty to make decisions that are in public`s best interest, recently it has been suggested that all mines be nationalised, this paper is aimed at evaluating the feasibility of such an initiative.

A comparison will be made between South Africa and other states around the world that in the past nationalised their mines to determine whether or not this will be a success by looking at the situations of those states when they nationalised mines and how South Africa is now. An evaluation of the precautions that have been proposed to make sure that nationalisation in South Africa is successful unlike that of other states around the world.

The primary objective of the research is to find the possible benefits and shortcomings of nationalisation and weighing them to see which of the sides the scale topples. The secondary objective was to critically evaluate factors that resulted in the success or failure of this initiative in other states around the world. In carrying out the assignment only secondary research was done through the consulting various textbooks, journals and internet sources.

The researcher also encountered difficulties in carrying out the assignment; these include failure to access the information. To overcome this problem the researcher had to subscribe for temporary access of information to firms that offer these data.

Literature review follows and focuses on the benefits of nationalisation of mine then followed by the shortcomings. Lastly is the summary, conclusions and recommendations.


Nationalisation is defined as the takeover of privately owned corporations, industries and resources by the government with or without compensating those who previously owned them. There are several reasons that state governments such as that South Africa may have to nationalise mines. The mining industry in the year 2009 contributed 8.8% directly and 10% indirectly to country`s gross domestic product (GDP) and it employed one million people (500 000 indirectly), judging by these figures it is evident that mining is a very significant industry to South Africa. It is common that common that government be interested in the efficiency, stability, growth and sustainability of such an industry. One of the ways the government can ensure the industry maximises its potential according to theses four key performance areas is through nationalisation. (Nolutshungu 2011:13).


It was determined that in the year 2009 South African surface mine workers earned around R1 500 each month while underground worker got R3 000. Canadian mine workers in the year 2006 earned approximately $26000 each month according to Van Wyk (2010) this evidently means that the workers in Canadian mines earned more than 600% in the year 2006 of what South African mine workers earned in the year 2009 so this means that in this year Canadian mine workers might be earning a higher wage than that they had in the year 2006 assuming that their wages have been adjusted for inflation. The African National Congress Youth League (ANCYL) had a discussion in February were Julius Malema expressed that the Youth League was of the opinion that all mines should be nationalised primarily reason behind this is to create more jobs and pay an elevated wage to the workers, that fairly remunerate mine workers for their hard and dangerous work (Malema 2010). Given that wages are increased and the production quantity is maintained at the same level, it’s calculated that unemployment rate will escalate, the mine will...
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