Wednesday, October 5, 2011

How Government gets nationalisation wrong!

Susan Shabangu, our Minster of Mineral Resources, has said that there are no signs of disinvestment as a result of the talk of nationalising mines. The Minister needs to learn that there is a big difference between investment and disinvestment.

Investment means money flows in. That demonstrably isn't happening, because there are no new mines opening in spite of the minerals boom. Talk of nationalisation is only one reason for this - lack of energy is another, lack of infrastructure a third. There is the billions invested in Richards Bay Coal Terminal to get the capacity up to 90 million tonnes a year, and the railways struggle to deliver 60 million. At today's prices, that is a loss of foreign exchange of around R3 billion annually. The loss of a return on investment is perhaps another billion.

Disinvestment means money flows out - and the reason why money isn't flowing out is because no-one wants to buy the assets because of the threat of nationalisation. So she is right for all the wrong reasons!

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