Picture: BUSINESS DAY
Picture: BUSINESS DAY

FOR those who have been on tenterhooks to see what the African National Congress (ANC) will resolve on economic policy at Mangaung, the waiting is quite suddenly over.

Comments from the head of the ANC’s economic transformation committee Enoch Godongwana to Bloomberg News on Wednesday, that in all likelihood the ANC would opt to increase mining taxes in line with the proposals on the table, are a frank assessment of Mangaung’s likely outcome.

The surprise that followed his statements are more surprising than the statements themselves.

The writing has been on the wall since the publication of the ANC-commissioned paper "State Intervention in the Mining Sector" (Sims) and has been pretty much cast in stone since the ANC’s policy conference in June. At that meeting a lengthy and tense debate was held on the issue of nationalisation, followed by even more tense negotiations over the wording of the final statements.

The recommendation from the policy conference very clearly endorsed the Sims document, which rejected "wholesale nationalisation" and supported "strategic nationalisation", by which was meant the question would be decided case by case , and going by evidence available.

A small but important development was that while the Sims document suggested "a super tax" on windfall profits, the policy conference stopped short of saying exactly what form the tax should take.

Instead it said: "The state must capture an equitable share of mineral resource rents and deploy them in the interests of long- term economic growth, development and transformation."

For Mr Godongwana, who is at pains to point out that he is not pre-empting the outcome of the conference, the point is that there is unanimity within the ANC that despite the contribution of mining companies to the fiscus, the "equitable share" is not being captured at present.

"At the policy conference we said ‘capture the rent’. What we have not specified is what form of tax precisely, because that is a technical matter.

"While the present regime does not capture the large profits being earned through some commodities, the counterargument to a super tax is the volatility of commodities. It is not an easy choice, and government is doing that technical work," he says .

The Treasury, al though it has made no public comment, is known to be strongly opposed to the super-tax proposal . Its stance on the matter seems to be part of the reason why commentators were surprised by Mr Godongwana’s statements.

Some mining companies had already persuaded themselves the idea was off the table.

But while the Treasury in the past was able to hold the line on matters it considered nonnegotiable, those days appear to be coming to an end .

There is no possibility, regardless of the appeals from the Treasury or the amount of noise from credit ratings agencies, that the commitment to raise mining taxes will not be endorsed at Mangaung.

The moderates — among whom Mr Godongwana is included — could still have difficulty in holding delegates to this formulation. After the policy conference there was dissatisfaction over the formulation, with the left saying the resolution was watered down by the economic transformation committee.

At the last two ANC national gatherings it has become fashionable, if not essential for one’s credibility, to be seen to actively support nationalisation. Thus a long queue of people, who don’t normally bother themselves with economic debates, have now joined the discussion with enthusiasm, in what Minister of Planning Trevor Manuel has described as "vuvuzela politics".

This was brought on by the ANC leadership battle, where nationalisation became the ANC Youth League’s proxy for a factional attack on President Jacob Zuma.

Hopefully, with that issue settled and Mr Zuma on his way back to power, the frenzy will subside. This will make the job of the moderates easier and agreement on the formulation of "capturing an equitable share of mineral resources rents" a formality.