South African mines will *not* be nationalised

pmbug

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Julius Malema, leader of South Africa's ANC Youth League, has been demanding the nationalisation of the country's mining sector for some time now. But the moderate faction of the ANC has been able to suspend Malema from office for the next five years. After Zimbabwe's President Mugabe decided to nationalise the country's mining industry, fears have been growing among investors that South Africa, the world's largest mining country, could follow Zimbabwe's steps.

During last week's summit of the Canadian-South African Chamber of Business, Bobby Godsell, former CEO of the mining giant AngloGold Ashanti, said that a nationalisation of the South African mining sector was highly improbable. Malema's suspension is relief for many investors, since his plans were hostile to business and a danger to the economic stability of the country. ...
More: http://www.goldmoney.com/gold-resea...h-african-mines-will-not-be-nationalised.html
 

DSAbug

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This really isn't news and people that were selling based on this political rhetoric need to pay attention to what the charts are telling you. South Africans have been outperforming the rest of the gold space pretty substantially. They have a political elite in South Africa that is in bed with the mining industry. There was no way in hell they were going to nationalize their mines with those people in charge.

In 5 years though...
 

DoChenRollingBearing

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Foreign national governments don't have to nationalize the mines to greatly benefit even if the price of gold goes very high... FOFOA teaches us that they can TAX them instead, thus taking whatever "fair share" they can get away with and yet still keep the doors open to foreign investors.

For example, if gold goes to $5000, then the foreign national governments tax the gold production $2500 / oz. Gold goes to $55,000 (yes! please do!), they tax them $50,000 / oz.

I assume in the above examples that costs (fuel, etc.) do not go up nearly as much as the gold price does.
 

Silver_Bug

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This is of course a political decision, and we dont know how ANC internal power struggles will develop in the next 20-30 years. However, the best policy is NOT to nationalise the gold mines as they need foreign investment, expertise and technology transfer if they want to increase or even maintain current gold production.
South Africa experienced a precipitous gold production decline from reduced investment and a nationalisation will only speed this up. South African society needs the shot in the arm from gold exports so in the near term (10 years) it is highly unlikely they will nationalise gold mines. It is likely that as long as gold mines do not lose money, they will not be nationalised.
 
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