To a large extent Malema’s wish to nationalise the mines looks an awful lot like a bluff he ended up having to stick to – which is to say a lot of people seem to feel that it is a good idea. I am not a mining expert either, but just looking at it with a bit of common sense – it isn’t.

Why? Well, lets tackle the points our Sunday paper talked about Malema raising.

• The state should own all the nation’s mineral resources.

This demonstrates that Malema doesn’t actually know what he is talking about. The state already owns the nation’s resources – mines are licensed, in other words miners have to go get government’s permission to run their mine on state property.

• There should be an immediate moratorium on new mining licences to prevent “looting” in anticipation of nationalisation legislation

Julius, again demonstrates that he doesn’t know what he is talking about. Mines aren’t set up as a matter of sticking a spade in the ground and yay – you have a mine. In this country you need to run environmental impact assessments, get your mine cleared as actually being safe to build. Even if you took all of that out of it, there is the raw time it takes to prospect and actually build a mine.

Even Anglo American cannot instantly set up a mine and make money off of it. This is why Malema calling for nationalisation means he would have an easier time in getting mining licenses without competition – he knows it isn’t ANC policy and it isn’t likely to be. The mining houses aren’t so sure.

Lets be  clear here – “looting our resources” isn’t an issue with new licenses.

A further point of how this is bad: We want jobs. We live in a country where we have a fifth to a quarter of our population that wants jobs, who can’t find any. Malema’s suggestion is essentially a freeze on a major industry, meaning we end up with lower jobs growth.

Malema is a man of the starving masses, if he had his way the masses would starve.

• Existing state mining should be consolidated in one company that would invite private-sector partners to take up to 40% equity in new joint ventures;
• The private-sector partners would provide the capital to develop new mines. Consortiums would have to comply with BEE rules and would pay taxes and royalties on their shares of the joint venture revenue;

Okay, so why would they want to? 60% of the profit goes to the government before taxes are figured into it. Once you factor in taxes (which would likely be at the top bracket) why would they want to spend that much capital on those mines? Just a point here – mining companies tend to close and open mines as the price of the mineral they are mining goes up or down. Whether a mine is profitable or not is a matter of highly volatile forces. Miners make their money fast to cope with the times when they are losing it.

• Holders of existing licences would continue until their licences come up for renewal – typically after 20 years – at which point they would be allowed to continue only in a 60-40 partnership with the state;

Okay, so for the next 20 years they intensify their mining without really considering that they will have to clean up after themselves once the mine has been decommissioned. Yay Malema, yay toxic mine sludge in our water, a point that is already an issue our farmers are well aware of.

• Minerals would be sold at discounted prices to investors who develop local manufacturing capacity. Coal would be sold cheaply to power stations so that South Africa could again make long-term cheap-power deals to lure major investors; and

Interesting idea – except that once you have nationalised one major industry to the extent Malema wants to I am not putting my money anywhere near your country. Investors might like the cheap materials and cheap power, but generally the more ethical businesses out there also like some security. This is why generally when you look at “blood minerals” the people mining them are generally slave labour and the mines are hurried, unsafe affairs.

• The state mining company would be subject to a minister, not corporate governance rules.

Corporate governance rules have evolved over the centuries specifically to cope with the issues that affect corporations in various industries, mining included. Why essentially change away from these rules, to a different set which have not evolved to deal with the issues the said industry may face?

The opportunity cost

By the looks of it, Malema figures that state run companies are run better because look at how rare it is for them to go broke. The reason why they are state run, first off, is because they are judged to be in the national interest. This means if they look like going broke they are bailed out with tax money.

This isn’t a bad thing – some industries are so important that we want them to continue even at our expense. For example, we don’t want Rand Water to go broke and us end up with cholera in our water.

Second anybody following the news knows that our parastatals are a bit of a mess.

So what could we be doing aside from nationalising the mines? We could be sorting out our sewage crisis – that is going to require a lot of money and a lot of jobs to fix. We could be setting up a government fund to improve our research facilities, creating new products for our country to market and helping deal with our AIDS crisis.

America’s strength is currently in how many patents it holds, we could start building towards that and creating products where we aren’t directly competing with established powers.

We could have our government invest directly in building up our manufacturing sector – without relying on foreign investment, which even if it wants to come into our country, wants more out of it. We could invest in post-office banking, making money more affordable to the poor. We could bring down Telkom’s prohibitively high charges, encouraging development in IT, a field that has captured the national imagination enough that a informal settlement seems to be more likely to have a computer training school than toilets.

If we have the money to seriously consider nationalising one of our largest industries, we have more than enough money to create new ones. One of our serious issues in this country is we are risk averse to the point of it being risky to our stability. That is why the majority haven’t seen the benefits to economic freedom. Nationally we don’t risk doing something new; instead we wrangle over the same old business we have always had.