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Nationalisation Of Mines Essay

2746 words - 11 pages

1. Index
1. Index……………………………………………………………………………………………..1
2. Introduction……………………………………………………………………………………...2
3. Advantages of nationalising mines……………………………………………………………3
4. Disadvantages of nationalising mines………………………………………………………..5
4.1 Zambia………………………………………………………………………………..6
4.2 Venezuela…………………………………………………………………………….6
4.3 Botswana……………………………………………………………………………..7
5. State Owned Enterprises……………………………………………………………………...7
5.1 ESKOM……………………………………………………………………………….7
5.2 TRANSNET…………………………………………………………………………..8
5.3 SABC………………………………………………………………………………….8
6. Impact of nationalising mines………………………………………………………………….8
7. Conclusion………………………………………………………………………………………9
8. ...view middle of the document...

Malema also stated the nationalisation of mines fall under ANC policy and that communists could not know what ANC policy states. Pravin Gordhan, Minister of Finance retaliated by saying that the nationalisation of mines does not fall under state policy and that everyone is allowed to debate over the topic and deliver their own opinions. Not everyone is as keen as Julius Malema to have mines nationalised (Mpho, 2011). Tim Wood states that nationalisation of mines has lead to a decrease in foreign investment, especially after the questionable statements and outbursts of Julius Malema (Wood, 2010). This is exactly what will be discussed further, weighing up the advantages with the disadvantages and also explaining the implications when such a big sector is nationalised. Thus will it be concluded what the ruling party is to gain with the nationalising of mines.

3. Advantages of nationalising mines
A study done in 2009 showed that mine workers in South Africa earn around R1 500 per month for surface workers and R3 000 for underground workers. In Canada in 2006 mine workers earned around $26000 per month (Van Wyk, 2010). Therefore workers in a Canadian mine earned more than six times in 2006 what South African mineworkers earned in 2009. According to the ANCYL discussion done in February by Julius Malema, mines should be nationalised primarily to create more jobs and pay higher wages, thus “giving it back to the people” (Malema, 2010). In order to do this the following will happen graphically:
Producer loss
Unemployment rate
Price
Supply

P1
Consumer surplus

Producer surplus

P0

Demand

Q1
Q0
Q2
Quantity

If wages are increased to P1 and Q0 is kept the same, the graph indicates that unemployment will increase, the producer will have a loss as well as a surplus and the consumer will have a surplus. If the producer’s loss is bigger than the consumer surplus, the company will make a loss, thus to keep unemployment from rising while paying higher wages, research must be done (Wood, 2010).

Mister Peter Leon, Chairman of the Mining Law Committee of the International Bar Associations, states that there can be a quite a few advantages by nationalising mines (Leon, 2010). If the mining sector is nationalised the government will have direct control over the sector and not through all the regulations. If the mining sector is under government control, minerals would then rather be sold locally rather than exported to foreign countries. As previously discussed, employment can be protected and the maintenance of production levels of important minerals where the mine is struggling financially, but this will also require a substantial amount of capital from the government. Leon further states that if the nationalisation of the mining sector succeeds the revenue generated from the mines will form part of the national revenue and benefit the whole country. Social economic development will thus be improved. If nationalisation proves to be...

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