ANC to set up state mining company

A top official of the African National Congress says they plan to set up a state mining firm after next week's election, but not nationalise mineral assets.

A top official of the African National Congress says they plan to set up a state mining firm after next week's election, but not nationalise mineral assets.

Led by presidential frontrunner Jacob Zuma, the ANC is expected to retain its dominance in the April 22 general election with a promise to do more for the poor in the major metals producer but also to maintain business-friendly policies.

ANC Secretary-General Gwede Mantashe said a state mining firm would create jobs and help Africa's biggest economy benefit more from its mineral wealth.

"Having a state mining company is distinct from nationalisation.

"It will compete with other companies in mining," he said, adding it would also renew a focus on local processing.

"To sell gold or iron ore in raw form undermines our mining industry. We sell less value like raw iron ore and buy products such as steel at a higher cost."

But signs of greater state involvement in the sector, which accounts for seven percent of gross domestic product and nearly half a million jobs, could raise concerns among investors wary of any shift to the left under Zuma.

South Africa is the world's top source of platinum and the third largest gold producer.

Mantashe said the new firm might focus on strategic minerals such as coal, uranium or platinum, and operate in a similar manner to state-owned PetroSA, which competes with private oil firms, particularly in exploration.

The mining sector is subject to intense scrutiny by big foreign groups such as Anglo American, which want the sector handled carefully.

Paul Walker, chief executive of London-based metals consultancy GFMS, said state involvement was a bad idea.

"My instincts tell me as a general rule state miners are less efficient than private miners. Making a return on capital for shareholders focuses the mind like nothing else," he said.

"Talk of beneficiation has been around for some time, but they have to realise there is a limit as to how quickly you can turn this country into a jewellery maker," he said.

Mantashe did not say what the cost of setting up the state firm would be or how it would obtain mining rights. - Reuters

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