270210 Julius Malema President of The ANC Youth league addreses the Media at The ANC head office' Ntuli House' in Johannesburg CBD to adress various burning issues including the bad media publicity he has been receiving lately. Picture: Antoine de Ras. 22/02/2010

Johannesburg - Following calls by Julius Malema, the then-leader of the ANC Youth League, for mines to be nationalised, the ANC’s national executive committee commissioned a study to establish the viability of state participation in the mining sector.

To inform policy on leveraging South Africa’s mineral wealth to achieve the goal of ensuring that all citizens benefit equitably from mining, a team of experts was appointed to conduct a review of state intervention in the mining sector (Sims) around the world.

The resultant document comprises case studies of governments that have intervened in the extractive industry, namely Brazil, Chile, Venezuela, Botswana, Namibia, Zambia, China, Malaysia, Norway, Finland, Sweden and Australia.

The report abandons the notion of nationalisation of mines, saying it would be too expensive to acquire all listed and non-listed mining companies. This would cost more than R1 trillion, which the government could not afford.

The report instead proposes a 50 percent tax on all “super profits” from mining companies and a reduction of royalties from 4 percent to 1 percent.

This resource rent tax on all mining would kick in after a normal return on investment was achieved so as not to penalise marginal or low grade deposits. The report further proposes that the resource rent tax receipts would be paid into a sovereign wealth fund, part of which should be used to develop infrastructure, skills and geological knowledge to the benefit of the minerals sector.