The impact of the proposed nationalisation of South African mines on employment in the platinum sector

Abstract

Many forums have been recently organised in South Africa to discuss the level of State intervention in the minerals sector, the expropriation of private mining companies, and the transfer of mineral wealth to the people. The objective of this research was to explore the possible impact that the nationalisation and the introduction of a resource rent tax will have on the capability of platinum mining companies to create sustainable employment while remaining profitable in South Africa.The research was qualitative and exploratory in nature. The sampling frame included major platinum group metals companies, which constitute an industry concentration of more than 50 per cent. Semi-structured interviews were conducted with 13 senior managers and executives from the platinum mining industry.The results have shown that nationalisation of platinum mines, where the government has total ownership or majority control of the company, will not create sustainable employment in South Africa. In addition, nationalisation of mines will isolate South Africa from external capital because private investors have been reluctant to put their money where mining companies were nationalised, especially in Africa. Although the introduction of a resource rent tax may be viable in a short term, it is believed that the competitiveness of mining companies operating in South Africa will be compromised.