* ANC plans state mining firm
* Party says will not nationalise mines
* Mine safety a big ANC priority
By James Macharia
JOHANNESBURG, April 14 South Africa's ruling ANC
plans to set up a state mining firm after next week's election,
but nationalising mineral assets is not on the agenda, a top
official of the African National Congress said.
Led by presidential frontrunner Jacob Zuma, the ANC is
expected to retain its dominance in the April 22 general
election with a promise to do more for the poor in the major
metals producer but also to maintain business-friendly policies.
ANC Secretary-General Gwede Mantashe, a former mine workers
leader who also chairs the ANC's Communist Party ally, said a
state mining firm would create jobs and help Africa's biggest
economy benefit more from its mineral wealth.
"Having a state mining company is distinct from
nationalisation. It will compete with other companies in
mining," he told Reuters, adding it would also renew a focus on
"To sell gold or iron ore in raw form undermines our mining
industry. We sell less value like raw iron ore and buy products
such as steel at a higher cost."
But signs of greater state involvement in the sector, which
accounts for 7 percent of gross domestic product and nearly half
a million jobs, could raise concerns among investors wary of any
shift to the left under Zuma. South Africa is the world's top
source of platinum and No. 3 gold producer.
Mantashe said the new firm might focus on strategic minerals
such as coal, uranium or platinum, and operate in a similar
manner to state-owned PetroSA, which competes with private oil
firms, particularly in exploration.
The mining sector is subject to intense scrutiny by big
foreign groups such as Anglo American (AAL.L), South Africa's
biggest mining player, which want the sector handled carefully.
The global economic slowdown has already knocked metals
prices and put thousands of jobs on the line.
Paul Walker, chief executive of London-based metals
consultancy GFMS, said state involvement was a bad idea.
"My instincts tell me as a general rule state miners are
less efficient than private miners. Making a return on capital
for shareholders focuses the mind like nothing else," he said.
"Talk of beneficiation has been around for some time, but
they have to realise there is a limit as to how quickly you can
turn this country into a jewellery maker," he said.
"It requires training, investment, infrastructure and there
is competition out there with countries like India and Turkey."
Mantashe did not say what the cost of setting up the state
firm would be or how it would obtain mining rights. The state
holds mining rights taken from smaller mining companies that
have been unable to exploit them.
Another priority for the ANC after the election will be
ensuring mining companies do more to build roads, schools and
hospitals in the communities where they mine.
"The government can achieve these welfare goals by requiring
mining companies to design social and labour plans when seeking
to convert their mining rights into new ones," Wonder Nyanjowa,
a Cape Town-based Frost & Sullivan mining analyst said.
The ANC, allied to unions including the powerful National
Union of Mineworkers (NUM), has also pledged to address South
Africa's dire mine safety record, one of the worst in the
Shoddy maintenance, earth tremors and human error led to 168
mine deaths last year and 221 in 2007. The government routinely
halts production after each fatality.
Mantashe backed legal amendments passed by parliament last
year, but yet to be signed into law, which would enforce higher
fines and make mine executives criminally liable for deaths. The
industry fears the laws would mean an exodus of mine managers.
"When the price of a commodity is strong, some producers
take short cuts to push for more production. In such cases, they
should be punished," said Mantashe.
(Editing by Matthew Tostevin and James Jukwey)