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BLOEMFONTEIN, SOUTH AFRICA — After years of damaging debate, South Africa’s ruling party has finally vetoed the idea of nationalizing its mining sector.
The announcement is part of a broad defeat for the left-wing factions in the African National Congress, reassuring investors and allowing more influence for pro-business leaders in the party. But in a compromise with the left-wingers, the ANC agreed to impose some form of higher taxes on the mining sector, and it promised a bigger role for a state-controlled mining company.
As the world’s biggest platinum producer and the fifth-biggest gold producer, South Africa should be attracting interest from mining investors from around the world. But many companies are scared away by its poor labour relations, heavy government involvement in the sector, and the continuing talk of nationalization.
Many Canadian mining companies have avoided South Africa, preferring to invest in other places, especially West Africa, where governments are seen as friendlier. Canadian mining companies are among the biggest investors in West African countries such as Burkina Faso, Mali, Niger and Senegal.
South African government ministers have often expressed opposition to nationalization, but the issue remained on the table for years because the ANC did not take an official stand, and the supporters of nationalization have remained vocal and active.
The ANC, which has ruled South Africa since the defeat of apartheid in 1994, finally recognized that its mining industry was being severely damaged by the persistent talk of nationalization, and it took steps to kill the issue this week at a major elective conference in the provincial city of Bloemfontein.
“The issue of nationalization … is off the table,” South Africa’s public enterprises minister, Malusi Gigaba, said in a media briefing at the end of the five-day conference, the biggest ANC decision-making event since 2007.
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