* Push for nationalisation motivated by “something else”
* Nationalisation could destroy fiscal stability (Recasts with background, analyst comment)
By Agnieszka Flak and Ed Stoddard
JOHANNESBURG, July 13 (Reuters) - Nationalisation of South Africa’s mines needs to be debated and not dismissed, the head of Africa’s top gold miner said on Wednesday as he warned that such a move could destroy the country’s fiscal stability.
The comments by Mark Cutifani, the chief executive of AngloGold Ashanti , are the latest from top miners on the issue, underscoring boardroom concerns that talk of nationalisation by radical elements in the ruling African National Congress are making investors and shareholders nervous.
In a letter published in the Business Day financial daily, Cutifani said the push for nationalisation of South Africa’s mines, led by the Youth League of the ANC, was motivated by “something else” than a call for greater social change.
“Surely nationalisation cannot mean what it might be taken literally to mean: the acquisition by the state, with or without compensation, of all the country’s mining assets,” he wrote.
“If compensation is paid, it would destroy South Africa’s fiscal stability,” he said, adding that if companies were not compensated, it would destroy the finances of many average South Africans who would had invested in companies either directly or via pension funds.
Nationalisation in South Africa would have global market implications as it has by far the largest platinum reserves in the world and remains a top gold producer.
It is not ANC or government policy at the moment but the influential Youth League is trying to change that.
Much of the political impetus behind Youth League leader Julius Malema stems from the failure of post-apartheid affirmative action, or “empowerment”, to spread wealth and control of the economy beyond whites and a small black elite.
Malema’s rhetoric about nationalisation and seizure of white-owned farms without compensation has unsettled domestic and international investors, not least for its parallels to the disastrous policies of President Robert Mugabe in neighbouring Zimbabwe.
Mugabe’s government began seizing white-owned farms over a decade ago, ruining the harvests of a regional breadbasket, and it is now demanding majority local stakes for black investors in foreign-owned mining companies.
Cutifani said that while the industry may have failed to meet some of the transformation targets and more needed to be done, much had been achieved to spread wealth and benefit previously disadvantaged black South Africans.
He said he supported the recently created state-owned mining company, which some said should be the extent of state involvement in the industry.
“The state-owned mining company offers further opportunities. We offer all reasonable support,” he said.
His comments follow those of Anglo American chief executive Cynthia Carroll who said in late June that governments in mineral-rich countries must steer clear of the “blind alleys” of nationalisation.
Anglo gets about half of its operating profits from South Africa where its units include Anglo American Platinum , the world’s largest primary platinum producer which accounts for about 40 percent of global supply.
“The miners are concerned about being silent on the issue and they feel they need to weigh in on it. Otherwise it is a one-side tirade from Julius Malema and the Youth League,” said Gary van Staden, a political analyst with NKC Independent Economists.
“They have decide they need some voice in the debate because if the tirade stays one-sided then there is a negative impact on investor sentiment both direct and indirect,” he said. (Editing by Marius Bosch)