THIS year’s Mining Indaba takes place when the relationship between the government, its regulators and private mining companies is at a particularly low ebb. Senior African National Congress leaders have called for idled assets to be seized and auctioned to save jobs, while Mineral Resources Minister Susan Shabangu has said the mining rights of those companies threatening to restructure and retrench could be reviewed.

Anglo American Platinum has been caught in the eye of the storm and has had to postpone restructuring plans to appease fuming government officials. It remains unclear what policy changes or further engagement can make up for the fact that global demand for platinum group metals has plummeted, or that the company’s production was hit by unprotected strikes in October. Production for the last quarter of last year fell 34%, but this was only the precursor to the very bad news released on Monday — that headline earnings for the year to December were down 141% to a loss of R1.47bn due to lower sales volumes‚ soaring mining inflation and lower realised metal prices.

Ms Shabangu delivered the keynote address at the indaba last night, one of the most important speeches she has ever made. It came against the backdrop of a sector with its back firmly to the wall. We hope she managed to claw back some of the trust that has been lost in the past month. Opposing her this week, from the perspective of the private sector, will be compelling speakers calling for less state interference.

Ensuring that a diverse set of local companies benefit downstream industries, and that minerals are not simply extracted and sold on in their raw form, is less about grand control schemes and more about getting enabling policies in place. Zimbabwe has set an excellent example of what South Africa must not do. The land expropriation scheme of the early 2000s ended in disaster, which was compounded by the worst hyperinflation the world has known. The current iteration of this failed strategy — the so-called indigenisation of company ownership — is bound to delay Zimbabwe’s economic recovery further.

A good place to look for a mining plan that could work in Africa lies, ironically, in the latest policy document of the embattled opposition in Zimbabwe. At the launch of its Jobs, Upliftment, Investment Capital and Environment economic blueprint late last year, the Movement for Democratic Change (MDC) called for a friendly environment for domestic investment and foreign direct investment of the sort that creates jobs through genuine capital investment. A sovereign wealth fund similar to other successful resource-rich jurisdictions is mooted. It will be financed from mining proceeds to create a reserve for the redistribution of proceeds to all citizens, as well as to future generations.

South Africa is, thankfully, not weighed down by the shackles of Zimbabwe-style indigenisation, although policy makers are going to have to be careful to ensure that broad-based black economic empowerment regulations do not become self-defeating. The recent threats against private companies saw the government overstep the mark and South Africa is already losing investment to other African countries.

The MDC’s proposed policy is actually the antithesis of the present approach, although this does not mean the state would have no role to play. The aim would be to ensure that finite, non renewable resources are exploited to the benefit of all. Like South Africa, Zimbabwe has immense natural resources, and a well managed sovereign fund seems a better option than trying to develop an efficient state mining company.

The Mining Indaba is a showcase for Africa’s economic potential, but it will remain just that in the absence of sound policy choices that encourage investment.