Economist and author Dambisa Moyo. Picture: FINANCIAL MAIL
Economist and author Dambisa Moyo. Picture: FINANCIAL MAIL

RESOURCES nationalism in the form of direct participation in the mining sector or higher taxes could increase commodity price volatility and stifle investment, according to economist and author Dambisa Moyo, who will be a keynote speaker at the Mining Indaba in Cape Town this week.

The African National Congress (ANC) rejected nationalisation of South Africa’s mines at its policy meeting in Mangaung last year. The party did, however, adopt the State Intervention in the Mining Sector report, which included proposals for windfall taxes, the creation of a state mining corporation and declaring certain commodities as strategic resources.

Policies adopted at the ruling party’s national conference usually become national policy, yet Mineral Resources Minister Susan Shabangu has not elaborated on how policies and additional resource rents would be implemented.

"We need to understand the government's role as measures such these are not viable in the long term," Ms Moyo said in an interview with Business Day on Friday.

Ms Moyo, who has worked at the World Bank, emphasised that the concept of resources nationalism was not unique to South Africa, and by extension Africa, but rather a global phenomenon.

"South Africa is not immune to what’s happening across the world," she said. "However any increase as proposed by the government could lead to industry structural pressure — that is, demand pressures relative to the availability of supply — as well as tactical pressures" she said.

"Although I see a lot of tension, I think that such measures will be tragic, as this will lead to higher volatility in commodity prices and lower investments in the mining industry."

She added: "It’s also a question of the ability of the government to run the mines."

Ms Moyo said that at the Mining Indaba she intended to touch on misconceptions over China’s appetite for commodities as the world’s second-largest economy continued its infrastructure expansion drive, which has led to a commodity "super cycle" over the past decade.

"There’s a lot of misunderstanding over China’s growing demand for commodities," she said. "There has been far too much speculation about China’s economic growth.

"My aim at the Mining Indaba is to provide a hypothesis over the role China will play as we witness its excess appetite for investments in the global mining sector."

The 19th annual Mining Indaba takes place in Cape Town this week. More than 7,500 delegates from the world’s top mining houses and officials from mining jurisdictions will reflect on events of the past year, which saw the bulk of commodity prices slow down as growth in China tapered.