The abolition of landed property in the Ricardian sense, that is, its conversion into state property so that rent is paid to the state instead of to the landlord, is the ideal, the heart's desire, which springs from the deepest, innermost essence of capital. (Marx 1863/1972, p. 472)
South Africa is one of the richest countries in terms of minerals. Up to now, however, this enormous wealth has only been used for the benefit of the tiny white minority. The minerals in the ground belong to all South Africans, including future generations. Moreover, the current system of mineral rights prevents the optimal development of mining and the appropriate use of urban land. We must seek the return of private mineral rights to the democratic government in line with the rest of the world. (African National Congress 1994, p. 99)
Over the course of the next six years, the ANC's basic minerals policy was both expanded and refined, finding initial legislative form in the Mineral Development Bill (MDB), which was released for public consultation in December 2000.1 By this time, the scope of the minerals reform had been widened to encompass distinct social, as well as economic, policy goals. The most significant of these social goals was the transformation of the racial structure of mine ownership, to be achieved primarily through the imposition of black shareholding quotas in established and new mining operations. This in turn would signal a shift to a more assertive phase in the ANC's broader black economic empowerment (BEE) strategy, as a number of commentators have noted (Dansereau 2005, Freund 2007, Hamann et al. 2008, Iheduru 2008, Southall 2004, 2007, 2008). Nevertheless, the MDB above all remained a reform of mineral property relations designed to accelerate capital accumulation in the mining industry by eliminating the barriers to investment and competitive entry posed by the private ownership and control of mineral rights, not least by the mining houses themselves. It is the central contention of this article that the MDB may thus be conceived within the rubric of historical materialism as a species of what Marx termed a ‘Ricardian reform’, after David Ricardo, the great classical economist who theoretically armed the rising industrial bourgeoisie in its historic struggle with agrarian landlordism (Rubin 1989, part 4).
In an earlier contribution to this journal (Capps 2012), I initiated an analysis of the platinum mining industry, which has rapidly grown from humble beginnings to become the single largest component of the contemporary South African mining economy. There I argued that the essential continuity of the old, apartheid-era mineral property system had enabled the established (white) platinum producers to reproduce their historic control over the national platinum endowment, which accounts for 88% of the world's total reserves, in the context of an historically unprecedented surge in global platinum demand from the mid 1990s on. As the fastest growing component of the post-apartheid mining sector with the greatest potential for racial transformation, the platinum industry would thus, I concluded, be cast as the primary site of struggle over the ANC's new minerals legislation. In this article, I continue the ‘platinum story’ by focusing on the course and outcomes of that struggle, which is in turn set within the broader context of the evolution and contradictions of the ANC's minerals policy in its conception as a Ricardian reform.
The analysis is developed in four steps. Section one seeks to make sense of the Ricardian concept and its analytical relevance to the MDB by considering the place of resource nationalisation in Marx's theory of landed property. The second shows how the measures of the MDB were at the same time shaped by the political imperatives of racial transformation and historic redress, and thus how in attempting to marry a classically bourgeois reform with a nationalist commitment to social justice the bill was a product of South Africa's transition in the era of neoliberalism. The third section considers how the established platinum producers would react to the ANC's proposed mineral reform by presenting their particular interest in the defence of the prevailing mineral property system as the interest of white corporate capital as a whole. Finally, the article investigates how the political and economic contradictions of the MDB would manifest in the struggle between the ANC and this ‘platinum interest’ over the final form and benefits of the new minerals dispensation, as eventually defined by the Mineral and Petroleum Resources Development Act (No. 28 of 2002) and its adjunct legislation.
A Ricardian reform
We begin, then, with the place of resource nationalisation in Marx's theory of landed property and hence the relevance of the Ricardian concept to the analysis of the MDB.
In his economic writings, Marx identifies modern (as opposed to feudal) landed property as a social relation that plays a contradictory role in the transition to capitalism. Capital both creates the modern form of landed property through the separation of the (previously fused) functions of agrarian production and landownership – thus establishing the class basis for a new collectivity of landlords defined by their possession of (bourgeois) property rights alone – and relies on this private property in land to achieve and maintain the separation of the immediate producers from the soil (‘proletarianisation’) on an extending scale. Yet, once a ‘free’ wage-labour force has been established, the negative aspect of modern landed property comes to the fore. Capital's access to landed resources for the purpose of accumulation is now mediated and conditioned by the ‘alien force’ of a landed class that stands outside the process of production (Marx 1974, p. 762). Moreover, the monopoly power that accrues to this class through the possession of land title enables it to extract a tribute from capital – that is, appropriate a portion of surplus value (surplus profit) in the form of ground rent – in return for the right to use that land as a condition or means of production (Harvey 1999, p. 73). Whilst modern landed property is an indispensible condition of capitalist development as a monopoly against labour on the land, it thus also comes to present a barrier to land-based accumulation as a monopoly against capital.
Confronted by a social relation that has become ‘superfluous and harmful’ to the capitalist mode of production, the bourgeoisie endeavours to overcome the obstacle of landed property in two ways (Marx 1974, p. 622). The first is for individual capitalists to buy-up the rights to the landed resources they seek to exploit, and thus end the separation between landed property and production by becoming landowners themselves – a move Marx terms the ‘de facto abolition of landed property’ (Marx 1974, p. 751, Neocosmos 1986, p. 31). The second, which is less common but of prime interest here, is for capital as a whole ‘to dissolve landed property as private property and transfer it to the state’ (Marx 1973, p. 279). For Marx, then, the legal abolition of private landed property ‘in the Ricardian sense’ – that is, in favour of public ownership by the capitalist state – is a thoroughly bourgeois measure. Not only does the nationalisation of landed resources leave capitalist production relations untouched, but it serves to accelerate accumulation in the land-based industries by eliminating the barrier of private landownership (Lenin 1972, ch. 3). Nevertheless, argues Neocosmos (1986, pp. 30–32), such a reform can also entail two kinds of contradiction from the perspective of the bourgeoisie.
By definition, land nationalisation aims to abolish a class of private landlords by abolishing their ability to realise ground rent. Yet, says Neocosmos, the legal dissolution of landlordism does not necessarily spell the end of the rent relation itself. Even where land is the legal property of the state (as opposed to private individuals), landed property still remains separated from capital: it is merely the jural form and social location of ownership that has changed. Consequently the state may fulfil the ‘class function’ of modern landed property and realise a part or the whole of the rent that would otherwise have accrued to an independent landlord class. Marx (1973, p. 279) termed this ‘socialised’ form of ground rent ‘universal state rent’ or, simply, a ‘state tax’. While land nationalisation may assist capital by modifying the social conditions of access to natural resources then, it can also displace the contradiction of rent on to a new plane.
Land nationalisation is subject to a second contradiction from the perspective of capital. Like the bourgeoisie, the working class may also adopt a distributional perspective and push for the abolition of private landed property, but here identifying ground rent as a drain on the wage rather than profit. Labour pressures for the nationalisation of landed property, however, carry the danger of ‘spilling over’ into demands for the nationalisation of productive property. Capital is therefore caught in the dilemma of deciding where the greater threat lies: a powerful class of landlords or a powerful working class? Moreover, adds Neocosmos (1986, pp. 31–32), where ‘capital is itself a landowner, any attempt to nationalise the land would be striking at the heart of capitalist relations themselves. Such a measure’, he continues, ‘could be revolutionary, for it would now be attacking private property itself, and it goes without saying that the a priori support of industrial capital to such a policy cannot be expected’ (see also Marx 1969, pp. 44–45).
As the arbiter and enforcer of capital's general interest, the bourgeois state is caught at the centre of these contradictions. It may well be the case that a programme of land nationalisation will benefit capital as a whole. But, as with any state policy, it is likely to confront the particularistic interests of individual sectors or firms who may benefit from the prevailing system of land relations. The political effect is that some segments of capital may ally with landed interests in opposition to land nationalisation, whilst others may ally with the working class to push for state ownership.
While Marx's analysis was primarily concerned with the role of modern landed property in agriculture, it is mining that has most often witnessed the nationalisation of natural resources to facilitate accumulation. By the late twentieth century, the vast majority of mining and oil producing countries had vested mineral rights in the state (Department of Minerals and Energy 1998, p. 12, Nore and Turner 1980, World Bank 1992, p. 23). Yet, as Fine (1982, 1985, 1990, 1992) has shown in his comparative study of minerals nationalisation in the European coal industry, the timing, mechanisms and dynamics of this Ricardian reform are critically dependent on a range of conjunctural factors. These include the historically given structure of landed property that capital confronts; the accumulation trajectory of the mining industry in question; and the wider political and ideological context within which the policy is formulated and enforced. With these points in mind, we now turn to consider how the conjuncture of South Africa's political transition would shape the actual measures of the MDB.
Contradictory measures
It has already been noted that the ANC's minerals policy was intended as more than just an ‘economic’ reform – the MDB also included distinct social policy goals. Both the economic and social measures of the MDB were in turn conditioned by the dominant political and ideological contradictions of South Africa's ‘negotiated transition’ from apartheid (1990–94). For present purposes, these may be considered to be of two closely related orders.
The first contradiction was between the ANC's popular mandate for radical social transformation, and its growing commitment to a neoliberal macroeconomic policy framework. The ANC was, of course, propelled to power by a militant, mass national liberation movement with the black working class at its core (Callinicos 1992, 1996). Yet, apartheid was overthrown at the precise moment of the Soviet bloc's collapse and neoliberalism's global triumph (Harvey 2005). Robbed of its principal Cold War ally and with its ideological compass spinning, the ANC leadership was corralled into the neoliberal camp with remarkable ease by a well-orchestrated intervention by the IMF and the World Bank, working in concert with the big battalions of domestic capital (Bond 2000, Gumede 2005, ch. 4, Marais 2001, McKinley 1997, ch. 5, and Padayachee 1994). In the very course of the transition, the liberation elite would thus internalise the globally hegemonic notion that there could be no alternative to the market in the new dispensation and that any project of social change would, therefore, have to work with its grain. The result, as Bernstein (1997, p. 19) notes, was ‘that the means once used to construct a (whites only) welfare capitalism – those of state driven accumulation, distribution and regulation – [would now be] denied to those most oppressed by apartheid’, while white corporate capital would be afforded a central role in the bid to modernise and transform South Africa (Marais 2001, p. 275).
The second contradiction that would shape the terms of the MDB arose from the negotiated transfer of power itself. From the onset of constitutional negotiations in December 1991, the National Party government sought guarantees that the interests of white capital would be protected in the coming dispensation (Murray 1994, pp. 180–206). The key demand was for a Bill of Rights that enshrined the sanctity of private property. This idea was by no means new. From the mid 1980s on, the liberal wing of big business had urged the apartheid state to reach a political accommodation with the forces of national liberation through a constitutional settlement that explicitly protected private property from future nationalisation or redistribution (Callinicos 1988, p. 162). To the dismay of many supporters, the ANC's negotiators conceded the basic premise of a ‘property clause’, choosing instead to agree those discrete areas that might be exempted (McKinley 1997, pp. 90–93, Murray 1994, pp. 180–206). The resulting ‘historic compromise’, which became section 25 of the final constitution (Act 108 of 1996), underlined the ‘nation's commitment to land reform, and to reforms to bring about equitable access to all of South Africa's resources’ (25[4a]). However, the wider wording was such that the actual status and legality of the state-led redistribution of landed resources, particularly without compensation, would be constrained and open to challenge. Any future attempt to radically transform property relations would, therefore, be caught between the state's constitutional commitments to promote ‘historic redress’ and ‘equality’ on the one hand, and to protect private property rights on the other (Levin and Weiner 1997, p. 21, Ntsebeza 2007).
How, then, did these contradictions combine to shape the ANC's new minerals policy? Although the reform of mineral property relations had been on the policy agenda since 1994, legislative development did not begin in earnest until the ANC's second term of government under Thabo Mbeki (1999–2004). Variously dubbed the ‘business-friendly president’ (Gumede 2002, p. 201) and the ‘African Tony Blair’ (Chothia and Jacobs 2002, p. 154), Mbeki had been the main mover behind the Mandela administration's early macroeconomic policy shift from the relatively statist Reconstruction and Development Programme (RDP) to the emphatically pro-market Growth, Employment and Redistribution (GEAR) strategy (Bond 2001, 2002, Gumede 2005, Jacobs and Calland 2002). The leitmotif of the Mbeki-ite vision for a ‘new’ South Africa was the rapid formation of a black capitalist class, which would be at once ‘productive’ (i.e. developmental) and ‘patriotic’ (i.e. socio-racially transformative) (Southall 2004). However, the first attempts at fostering this African ‘national bourgeoisie’ through ‘market-friendly’ black economic empowerment (BEE) measures had ended in dismal failure when the Johannesburg Stock Exchange (JSE) crashed in 1997, taking most of the new black business ventures with it (Southall 2004, Bond 2000, pp. 39–46, Marais 2002, Gumede 2002). Under Mbeki's stewardship, the second ANC government thus begun to adopt a more assertive BEE policy stance in which the state was allotted an increasingly interventionist role. Here the formulation of the new minerals policy would prove decisive.
One of the most striking features of the first wave of pro-market BEE measures was their inability to penetrate the minerals and energy core. According to Harvey, writing in early 2000:
The initial flurry of politically driven black empowerment deals which very quickly captured about 10% of shares on the JSE has dropped to about 1% at the end of 1999, down about R20-billion just over a year ago to a mere R5-billion…. It is interesting to note that the sectors in which black empowerment deals have been struck: telecommunications, media, entertainment and financial services. In the most important productive sectors there has been no significant penetration of black capital and it is very unlikely that there will be any. (Harvey in Mail and Guardian, 11 February 2000)
The strategically central and politically sensitive task of finalising the new minerals policy fell to the incoming minister of minerals and energy, Phumzile Mlambo-Ngcuka. A member of Mbeki's ‘inner circle’ (Gumede 2005, p. 12), Mlambo-Ngcuka was in many respects the perfect choice for overseeing the marriage of the ANC's transformation project with a classically bourgeois economic reform.2 As a result of her department's intensified drafting efforts, the BEE content of the minerals policy was beefed up, refined and released for public consultation in the initial legislative form of the Mineral Development Bill (MDB) in December 2000. The three main measures of the MDB may be summarised as follows with brief reference to the stated rationales, mechanisms and internal tensions of each.
‘State custodianship’
The MDB's primary economic goal was to kick-start a new wave of investment-led growth in the national mining industry through the strategic nationalisation and redistribution of mineral property rights. The case for this quintessentially Ricardian measure was made in terms of the equity and efficiency arguments that flowed from the neoliberal agenda for post-apartheid South Africa (Bernstein 1996, p. 30). The incoming government had inherited an extremely complex, fragmented and racialised structure of mineral property, which comprised a bewildering range of private, semi-private, and public ownership and use rights (Capps 2012, Cawood and Minnitt 1998, pp. 372–373). The architects of the MDB argued that all of these ‘old order’ rights should be abolished in favour of a standardised and universal ‘new order’ mining right, which would be centrally administered by the state and subject to a singular public royalty. Any companies deemed not to have made efficient use of their ‘old order’ rights would see them alienated to those that could – the so-called ‘use it or lose it’ principle. The new property regime would thus reduce transaction costs by rationalising capital's access to mineral resources, eliminate uncertainties and disparities in royalty rents, and facilitate equitable access to, and hence the optimal exploitation of, any previously unutilised rights.
Although the MDB's architects could easily demonstrate that their economic proposals were in line with the World Bank's (1992) Strategy for African Mining and international ‘best practice’, its Ricardian principle nevertheless confronted the contradictions of the ‘negotiated transition’ in a very immediate way. As just seen, the protections of property enshrined in the constitution raised the possibility of mandatory compensation for the nationalisation of all forms of private landed property, minerals included. In order to circumvent potentially crippling compensation claims, the MDB's drafters juggled with its wording (Business Day, 4 January 2001). Instead of saying that all mineral rights would now be owned by the state, the MDB spoke of the state custodianship of mineral resources which would belong to ‘all South Africans’. Likewise, any ‘old order’ rights could be exchanged for ‘new order’ rights, rather than face automatic expropriation. As such, there would be no legally recognised ‘deprivation of property’. Nevertheless, the scene was set for the mining houses to contest the constitutionality of ‘expropriation without compensation’, and hence the Ricardian core of the MDB, whatever the legal language or bourgeois rationales deployed.
‘Black economic empowerment’
The MDB made the case for its primary social goal in terms of the need to ‘expand opportunities for Historically Disadvantaged South Africans to enter the minerals and mining industry’. Continued white control of the sector was thus portrayed as an affront to received notions of equal opportunity, and a direct challenge to the constitutional commitment to ‘historic redress’. This, in turn, placed a mandatory duty on the state to actively intervene in the mining industry in order to promote new forms of black ownership and economic control. The principal instrument for doing so would be the criteria by which the ‘new order’ rights were to be centrally (re-)allocated and/or exchanged for ‘old order’ rights. In addition to demonstrating the optimal exploitation of these rights, the mining companies would also have to reach clear BEE criteria to be determined and adjudicated by the state. Security of tenure would thus be guaranteed, but only in so far as established mining companies complied with the government's aim of deracialising the industry and creating new opportunities for black ownership and profit-sharing during a specified ‘transitional period’.
A workable BEE strategy in mining was not only of concern to the ruling party. Sections of white monopoly capital had long held the view that the formation of a black ‘middle class’ was essential for stabilising South African capitalism (Davies et al. 1988, pp. 213–215, 325–329, Southall 2004, p. 315). The realities of the new political order further induced white monopoly capital to accept that some degree of economic deracialisation was both desirable and necessary. At one level, the formation of a new black business class would, as Fine and Rustomjee (1998, p. 699) put it, ‘serve as a buffer against more extensive assaults on the structure of ownership and the modus operandi of corporate capital’. At another level, the rapid economic elevation of leading lights in the former liberation movement would enable white capital to extend its influence over the new government and its policy decisions (Southall 2007, pp. 70–71). Yet, the major corporations still wanted it both ways. While BEE was certainly ‘good for business’ in principle, this was only if it was pursued at a ‘realistic’ pace and under their control. This was all the more important given the ANC's statist past and the ‘populist’ (i.e. redistributive) pressures to which it was now subject. The ‘legitimate’ degree of ‘empowerment intervention’ entailed within the MDB would thus present a second, major terrain of struggle with white mining capital and big business more generally.
‘The developmental royalty’
In addition to its social goal of promoting black capital, the MDB also included the more welfarist objective of stimulating the ‘local and rural economic development and social upliftment of communities affected by mining’. Here, the bill's drafters could draw attention to mining capital's historic neglect, if not destruction, of both the traditional ‘labour sending’ areas, and those ‘rural communities’ forced to ‘host’ mining activities. Two specific sets of measures were devised to ‘uplift’ the rural poor. First, the new, universal royalty now received by the state would be ring-fenced for redistribution to the labour reserve and mining areas for the explicit purpose of ‘rural development’. Second, in order to qualify for ‘new order’ rights, all established mining companies would also have to submit a ‘social plan’ that included measures to ‘empower’ local ‘communities’ through corporate social investment, small enterprise promotion and, later, equity stakes (Hamann 2003).
The ‘developmental royalty’ and ‘community empowerment’ measures (my terms) were at the cutting edge of the neoliberal vision of a new South African capitalism in which every social category would hold a ‘stake’. Rather than redistributing wealth to the ‘rural poor’ through generalised, progressive taxation, the company concerned would thus now be beholden to contribute to those it directly affected. By definition, the scale of this redistribution – whether by corporate social investment or royalty or share allocation – would critically depend on that company's declared profits. Social welfare would thus become an essentially private matter, a ‘contract’ between the ‘stakeholding’ rural community and the mining corporation that relieved the social burden from capital as a whole. Nevertheless, while big business in general may have had some sympathy with these proposals, the magnitude of the new state royalty would become a key point of contest with mining capital, as would the notion of ‘ring-fencing’ this public revenue for targeted redistribution.
To summarise: it has thus far been argued that the ANC's post-apartheid minerals policy represented a remarkable attempt to reconcile the nationalist demand for social justice with a classically bourgeois economic reform. The measures of the MDB would consequently incorporate and combine two distinct – and irreducible – levels of contradiction: first, the economic contradictions arising from the sectional interests of competing capitals, which, whilst historically contingent on both the extractive industry in question and the wider balance of class forces, are nevertheless general to all Ricardian reforms; and, second, the political and ideological contradictions inherent in the ANC's transformation agenda in the era of neoliberalism. Before moving on to consider how these contradictions would manifest in the struggle over the final form of the new minerals legislation, it is first necessary to establish why the platinum industry would be its primary target and central locus of white corporate opposition.
The ‘platinum interest’
While the MDB aimed to ‘modernise’ the mining sector as a whole, it is clear that the platinum industry occupied a special place in the ANC's transformation strategy. As I have argued in a previous contribution to this journal, this was due to the conjunction of three factors (Capps 2012). First, the advent of the new dispensation coincided with an unprecedented boom in global platinum demand, heralding a new and frenetic phase of productive expansion in the national industry. With the historically premier gold industry locked in steep decline, platinum would thus not only emerge as the most dynamic component of the post-apartheid mining economy, but, thanks to its vast untapped reserves, by far the largest in the world, the one with the greatest growth potential. Second, however, the apartheid-era mineral property system had enabled the major platinum producers to establish a near-monopoly over these reserves, through a combination of favourable mineral-lease deals with the former Bophuthatswana and Lebowa regimes – the Bantustans where the major reserves were then geopolitically located – and also by the direct acquisition of private mineral rights. This in turn constituted the cornerstone of an industry-wide strategy of regulating the rate of global supply in order to manage, or at least ride out, platinum's extreme price fluctuations (the consequence of the historically limited and highly cyclical nature of world platinum demand), while erecting a powerful barrier to competitive entry. Finally, the major producers were able to secure the reproduction of these strategic mineral property relations during the political transition and thereby enter the new dispensation in the unique position of exclusively controlling South Africa's vast, unutilised and increasingly valuable platinum endowment. From the perspective of those local and foreign investors aiming to break into this sunrise industry, the barrier of private landed property would thus in effect be presented by the platinum mining houses themselves.
By the time of the MDB's release in late 2000, it was apparent that the platinum subsector had become its primary target. As Minister Mlambo-Ngcuka would herself put it: ‘platinum is the single most important commodity with highest black economic impact. If we compromise on platinum it does not make sense to have the bill’ (cited in Business Day, 21 June 2002). Yet, if the platinum industry had become the first prize of the ANC's policy of racially transforming the mining sector alongside and through its productive expansion, the Ricardian measure at the centre of the MDB would represent nothing less than a direct assault on the core interests of the established (white) platinum producers. Indeed, from the moment that the prospect of minerals reform had come on the agenda, the platinum corporations had made it known that any such policy would be strongly resisted. Writing in 1992, one platinum analyst set out what was stake from the producers' point of view and, in so doing, gave notice of the industry's position:
As South Africa moves towards a new constitution, the debate over dormant mineral rights is increasing in intensity. It has been put forward by more left-wing elements that pressure should be applied to the holders of dormant rights to exploit the minerals, thus creating wealth and, perhaps more importantly, employment. Whilst we are not in disagreement with the objectives of such a scheme, if it was implemented, it could have a devastating effect on the long-term profitability of the platinum mining industry. The principal reason behind the success of platinum mining to date has been the control of supply to the market. If Rustplats [Rustenburg Platinum Holdings, later Anglo Platinum] had developed all the platinum mineral deposits at its disposal over the last decade, it is highly feasible that all platinum mines would now be marginal producers and paying virtually no tax to the government. We would far rather see a healthy South African platinum mining industry than an industry in perpetual crisis. (Authors and title unknown, extract in the National Union of Mineworkers ‘Impala Platinum Mines Factsheet’, n.d.)
It has already been noted that Ricardian reforms are deeply contradictory from the perspective of the bourgeoisie. The general fear that the nationalisation of landed property may spread to productive property is intensified where major capitals are themselves ‘owner occupiers’. A mineral property reform that would, in reality, only affect the major platinum producers, could therefore be presented as the beginning of an assault on the principle of private property itself. Moreover, the ‘empowerment strategy’ at the heart of the MDB rested on new forms of state intervention that seemingly departed from the ANC's macroeconomic policy stance. This could readily be taken as evidence that the government had started to buckle under ‘populist’ pressures and that the retreat from neoliberalism had begun. Land invasions and endemic ‘corruption’ in neighbouring Zimbabwe provided ‘proof’ of what lay ahead if the ANC's impending slide into ‘patrimonalism’ were not quickly arrested. The ‘platinum interest’ thus utilised its position in the South African Chamber of Mines (COM) to organise monopoly capital and forge a loose alliance with sections of international mine and finance capital, such as the Foreign Investor's Mining Association (FIMA). Mobilising its substantial resources and institutional power, the COM coordinated a vigorous campaign against the MDB that ranged from ‘forming’ public opinion to numerous bilateral meetings with the ANC, predicated on the ultimate sanctions of investment strikes and capital flight.3
Yet the forces pushing for minerals and mining reform were considerably wider than the new government alone. By the time that the MDB was released, an informal yet relatively cohesive ‘empowerment alliance’ (my term) had emerged incorporating the organisations of the ANC, its formal partners in the labour movement – the Congress of South African Trade Unions (COSATU) and the South African Communist Party (SACP) – and a new wave of aspirant black mining entrepreneurs.4 While there were important differences of emphasis between these parties over the aims and means of BEE in a new minerals dispensation, to some extent reflecting their different class bases and interests, all were nevertheless unified around the project of racially transforming the mining industry. The effect was to give the pro-MDB camp a strongly nationalist character and thus confront monopoly capital with a ‘popular front’ claiming to represent the black majority. Combined with the moral weight of ‘historic redress’, this would enable the state to adopt a position of non-negotiation on the fundamental principles of the MDB. The forces organised around the ‘platinum interest’ would thus be forced to engage on the substance of its measures rather than the policy itself. The ensuring struggle over the final form and benefits of the new minerals legislation would be waged over four distinct terrains, with each exposing the differences, as well as the potential unities, between the contending parties.
The struggle for the new minerals dispensation
The Ricardian principle
First were the questions of ‘state custodianship’ of mineral resources and ‘security of tenure’. Here we may note a deep historical irony. The ANC's intention to convert private mineral rights to the property of the state effectively reversed South Africa's history of racialised dispossession in which black mineral property was first seized by the apartheid government, with no compensation, and then redistributed to mining capital as private rights. The new policy of resource nationalisation would thus give white monopoly capital a taste of what it had been like to be black.
Unable to confront the principle of ‘state custodianship’ head on, the ‘platinum interest’ opted to make the policy unworkable by challenging the constitutionality of ‘expropriating’ its private minerals ownership and lease rights ‘without compensation’. Were this tactic successful, the state would not be able to afford the massive payouts entailed in their abolition. The defence of the apartheid minerals monopoly thus turned on three legal issues. First, whether the constitution's commitments to ‘equality’ and ‘redress’ outweighed its property clause; second, whether mineral rights were indeed a form of constitutionally protected property; and finally whether the difference between the ‘expropriation’ and ‘deprivation’ of mineral rights, as the MDB phrased it, was anything but semantic (Business Day, 12 March 2001). Accordingly, the COM launched its campaign by threatening to take the MDB to the Constitutional Court if its ‘concerns’ were not addressed.
At the same time, however, the ‘platinum interest’ feared that the ‘legal’ interpretation of these issues would ultimately be a political decision and therefore a course of action entailing considerable risks. Using the Constitutional Court as a bargaining counter, the COM constructed a second line of defence around the ‘economics’ of security of tenure. Unlike the question of private mineral property, secure mining rights were of concern to capital as a whole. The mining houses argued that their existing prospecting and mining rights should be automatically converted to ‘new order’ rights, and that these licences should be lifelong and free of ‘ministerial discretion’. To do otherwise would ‘seriously destabilise the industry’ and scare off the very investment that the bill sought to attract (Business Day, 12 March 2001). In effect, the COM aimed to reproduce the fully private status of mining rights that had been enshrined in the 1991 Minerals Act (Capps 2012), and so dodge the impending threat of the ‘use it or lose it’ principle. Powerful foreign investors likewise communicated their unease over the ‘limited’ status, and hence security, of the new mining rights.
Faced with growing criticism from local and international capital, the ANC made a number of tactical concessions while emphasising that public custodianship and administrative licensing were international norms (Mail and Guardian, 30 March 2001). Following a high-level meeting between the ANC and the COM in June 2001, and on the eve of an Mbeki-led delegation to meet London investors, Minister Mlambo-Ngcuka announced that the MDB would be withdrawn for redrafting in light of the industry's concerns (Business Day, 11 June 2001).5 By this point, however, the COM appeared to have toned down its (constitutional) objection to minerals nationalisation. The reason was not just to be found in the political strength and economic rationale of the ANC's case, but also in the way that the Ricardian principle exposed fundamental differences between the platinum mining capitals themselves.
Although all the established platinum producers had benefitted from the mineral lease agreements struck in the apartheid era, it was the industry leader, Anglo Platinum, which had in addition been able to hoard the lion's share of private mineral rights. As such, it was Anglo Platinum itself which presented the greatest barrier to competitive entry and productive expansion on the South African platinum belt. While the de jure nationalisation of mineral resources may have made the other platinum producers nervous, they, along with the aspirant empowerment entrepreneurs therefore had little to lose and, potentially, much to gain from the redistribution of rights promised by the new minerals dispensation.6 By tactically conceding on the question of security of tenure, the ANC thus succeeded in driving a wedge between the particularistic interests of the world's number one producer and its local and global competitors. This, as will shortly be seen, left Anglo Platinum with no option but to engage the Department Of Minerals And Energy over the future of the other rights it effectively controlled through numerous mineral lease agreements likewise acquired during the apartheid era.
The mining charter
If mineral property reform divided the producers between those with and without private rights, the second major area of BEE would split all forms of mining capital, established and aspiring, along clear racial lines. As with ‘state custodianship’, the COM could not publicly oppose the principle of ‘black empowerment’. Instead it vigorously attacked the ‘objectivity’ of the criteria by which the new mining rights would be awarded or withdrawn. Here the vague wording of the MDB worked against the ANC. The ‘discretionary powers’ of the minister rested on ill-defined, and hence ‘unpredictable’, allocative criteria of ‘decisions in the public interest’. This left the state open to the (familiar) charge of insufficient ‘transparency’ and hence potential ‘abuse’ (i.e. corruption) by ‘unscrupulous government officials’ (Sunday Times, 8 April 2001). Conceding the need to clarify the BEE criteria for the sake of ‘transparency’, the ANC agreed to negotiate a ‘Broad Based Socio-economic Empowerment Charter’ as an adjunct to the main legislation. The terms of this Empowerment Charter thus became the terrain of struggle over the extent and pace of state-led BEE.
In July 2002, an internal DME draft of the Empowerment Charter was ‘leaked’ and rapidly circulated around the ‘investment community’. The draft Charter proposed boosting ‘empowerment ownership’ in all mining ventures, new and established, to 51% within a decade. Moreover, in line with black capital's push for the new joint business model, this ‘ownership’ would be measured in equity stakes alone. The international financier's response was both instant and dramatic. ‘Screaming nationalisation’, billions of rand were wiped off South Africa's mining stocks as capital flew out of the Johannesburg Stock Exchange (Business Day, 30 July 2002, Business Day, 6 December 2002). Shaken and disciplined, the ANC quickly set about producing a revised and more ‘investor friendly’ Empowerment Charter under a new task team and in close negotiation with the COM.
The final draft of the Empowerment Charter was approved in October 2002. This stated that 15% of the SA mining sector should be empowerment controlled in five years and 26% within ten years of the MPRDA coming into effect. Moreover, the new participation percentages need no longer be measured in equity stakes alone: affirmative procurement (from small black businesses), employment equity, training, beneficiation and worker saving plans would become part of the equation. The credits to be awarded for each measure would be fungible and set out in a ‘scorecard’ designed to allow mining companies maximum leeway to negotiate their ‘charter requirements’ (Business Day, 6 December 2002, Business Day, 17 January 2003). Crucially, then, the state retreated from its singular commitment to creating a new layer of black mining investors through prescribed joint ventures, while incorporating measures that aimed to promote local level ‘corporate social responsibility’ in line with the ‘community empowerment’ aspect of the MDB (Hamann 2003, p. 8).
The LMT farms
The third point of struggle was far more localised, but also the most intensive. This would involve the ANC government using its existing powers to override the mineral-lease deals struck during the apartheid era, while demonstrating its commitment to force black entry into the mining industry through administrative intervention.
As has been noted, the predominant feature of the post-apartheid platinum sector was its phenomenal growth in response to soaring platinum prices from the mid 1990s on. However, the rush to expand platinum production through new mine developments was also driven by the imperative of pre-empting the ‘use it or lose it’ principle in the new minerals legislation (Business Day, 21 February 2001). By the same token, the major producer's actively sought new ‘empowerment partners’, poured money into an industry ‘empowerment fund’ and upped the rate of local corporate social investment in the hope that, by demonstrating their ‘voluntary’ commitment to the social goals of the MDB, they would win the moral ‘high ground’ and, with it, the argument that the industry was perfectly capable of ‘transforming’ itself. But there was a catch with this strategy of pre-emptive compliance. Pending the promulgation of the new minerals legislation, no new platinum project or venture could proceed without a mining licence granted by the national Department Of Minerals And Energy (DME) in terms of the 1991 Minerals Act. This gave the state considerable leverage to shape the terms of the proposed projects and deals and, through them, the future minerals dispensation.
The critical point of contest would be between the DME and Anglo Platinum over the future of a large number of mineralised farms in Limpopo. Under apartheid, these had fallen within the borders of the Lebowa Bantustan, and Anglo Platinum had gained the exclusive rights through a series of highly favourable mineral-lease deals with the Lebowa Mineral Trust (LMT) – a quasi-public body in which all state-owned mineral rights had been vested. Like all the Bantustans, Lebowa had been absorbed into the unitary post-apartheid state, but the LMT had remained intact pending its abolition at a later date. In the interim, it was bought under the administrative control of the minister of minerals and energy, who now exercised the authority to grant the prescribed mining authorisations in relation to the LMT's extant mineral-lease agreements. Anglo Platinum would thus have to deal directly with the DME if and when it decided to operationalise these options, which, like its private mineral rights, had not only been largely sterilised, but effectively blocked potential competitors from gaining entry to this sizeable portion of the national platinum endowment.
On the eve of the public release of the MDB in December 2000, and after protracted negotiation, Anglo Platinum and the DME reached an agreement on the granting of new mining licences to a number of the LMT farms (Business Day, 19 December 2002). The agreement specified that Anglo Platinum could push ahead with new projects on the twin conditions that its rights over similar properties were ‘released’ for reallocation to black empowerment companies, and that the new projects themselves involved a black empowerment partner. A major beneficiary of this latter condition was Patrice Motsepe's Africa Rainbow Minerals (ARM). In August 2001, ARM formed a 50–50 joint venture with Anglo Platinum in what became known as the ‘Modikwa’ (formally ‘Maandagshoek’) project, which, at R1.35 billion, was South Africa's biggest ‘empowerment’ equity deal to date. However, while the public image of the December agreements was one of mutual accommodation, the course of BEE did not run so smooth when Anglo Platinum attempted to broker a similar deal in June 2002.
As platinum demand continued to rise, Anglo Platinum applied for six new mining licences to develop further LMT farms in March 2001. Dubbed the ‘Twickenham’ metals project, the proposed investment of R2.7 billion aimed to consolidate Anglo Platinum's hold on the Eastern Bushveld by expanding its (four) existing operations and sinking new mines on two adjacent properties. The DME, however, refused to grant the licences unless Anglo Platinum ‘released’ more mineral rights and entered into further empowerment ventures. With the minerals legislation at the parliamentary hearings stage, the mining houses opted to make a final stand.
In June 2002, Anglo Platinum filed a court application against the DME's Limpopo representative, accusing him of ‘unreasonable delay’ (Business Day, 21 June 2002). Anglo Platinum also announced that if the MDB were enacted in its current form, the group's entire expansion portfolio of R20 billion would be in jeopardy. In a coordinated attack, the diamond monopoly De Beers likewise queried the future of its R10 billion investment programme. For its part, the COM threatened to take the MDB to the impending G8 summit as an abrogation of international agreements that ‘undermined [Mbeki's] New African Partnership for Development (NEPAD) by creating an environment unfavourable to development and sound governance’ (Business Day, 21 June 2002). Faced with the ‘blackmail’ of an investment strike and a very public slur on the president's pet project, the ANC went on the offensive. Minister Mlambo-Ngcuka stated that ‘if the rights demanded by Angloplat were granted under the existing law, the object of the bill to transform the industry and open up access to other players would be totally undermined’ (Mail and Guardian, 26 June 2002). As talks reopened with Anglo Platinum, the bill was pushed through the national assembly forcing, analysts claimed, the company to backtrack and drop the case (Business Day, 3 July 2002). By August an ‘empowerment deal’ had been sealed that involved Anglo Platinum setting aside pieces of land for new mines and committing to 50–50 joint ventures with two black mining consortiums (Mining Weekly, 13 December 2002). As a buoyant Mlambo-Ngcuka would put it in August 2002: ‘the successful conclusion to the negotiations has implemented the new minerals legislation before it has even come into force’ (Business Day, 8 August 2002). Three months later, the Minerals and Petroleum Resource Act had been gazetted with its core principles intact and would come into force on 1 May 2004.
The ‘developmental royalty’
Yet the struggle over the new minerals legislation did not end there. For, whatever its previous divisions and splits, the final issue of the new state royalty would unite all forms of mining capital – aspirant or established, black or white – against the government itself. As was noted above, the central contradiction of the Ricardian reform is that state landed property does not of itself eliminate rent, but rather modifies its form and final destination. In the South African case, the fragmentation and weakness of mineral property had seen mining capital benefit considerably from low or absent royalty demands in respect to the vast tracts of mineralised land owned and/or controlled by the apartheid and Bantustan states (Capps 2012). By proposing a standardised and universally enforced royalty, the MDB thus confronted all categories of mine owner and investor with the appropriation of a portion of their profits as a ‘state tax’. The ANC argued that the ‘resource rents’ generated by mining were ‘excess profits’ whose redistribution to central government would not negatively impact on accumulation. Nevertheless, the proposed level of the state royalty became the final site of struggle in the contest over the new minerals legislation.
The Ministry of Finance (MF) was charged with the task of drafting the new royalty legislation as an adjunct to the main MPRDA. Released for ‘public consultation’ in March 2003, the Mineral and Petroleum Royalty Bill (MPRB) proposed a sliding scale of royalty rates, depending on the mineral classification, levied on gross sales (Republic of South Africa [RSA] 2003). While the accompanying press release claimed that the prescribed royalties – 3% on gold, 4% on platinum and 8% on diamonds, calculated as a percentage of sales – were ‘internationally competitive’ (Ministry of Finance 2003, pp. 1–2), the industry reacted sharply. According to market analysts, if the proposed regime were applied to sales in 2001–2, mines would have paid R4.2 billion in tax, with platinum producers standing to lose between 9–12% of profit (Business Day, 24 March 2003). Shares in several big mining companies immediately fell on the MPRB's release, while the COM, foreign investors and the black industrial lobby group, the South African Mining Development Association (SAMDA), united in their opposition to the new royalty as a ‘punitive tax’ (Mining Weekly, 28 March 2003, Business Day, 23 April 2003, Business Day, 17 July 2003).7 The effect was to force the MF back to the drafting table.
Two years later, a new version of the MPRB was released for comment. This now incorporated the COM's preference for a single royalty formula based on profitable earnings, rather than on gross sales (Cawood 2010, Dansereau 2005, p. 57, RCA 2008, p. 13). Yet, there were still industry objections and, in May 2008, a final version of the bill appeared with two further amendments. First, a distinction was drawn between refined and unrefined minerals, with the latter pegged at a marginally higher rate and ceilings set on both. Second, the tax base was altered to ‘earnings before interest and taxation’, which would allow for 100% capital expensing in the same manner as income tax (RCA 2008, p. 13, Ministry of Finance 2008, pp. 1–2). Gazetted in August 2008 as the Minerals and Petroleum Royalty Act (No. 28 of 2008) and due to come into effect from 1 March 2010, this aspect of the new minerals legislation thus represented a significant retreat on the part of the state thanks to united industry opposition in which the common concerns of both black and white mining interests trumped their earlier divisions. The result was that the new state royalty was predicted to yield only R2 billion in its first full year of operation (KIO 2010, p. i), less than half the estimated public income of the original formulation.
Moreover, the MF made it clear that this revenue would no longer be ‘ring-fenced’ for targeted expenditure among mine-hosting and labour supplying rural ‘communities’, as per the original vision of the MDB (Ministry of Finance 2008:3). Rather, those ‘communities’ already in receipt of royalty from mining operations in their areas, would be able to retain this income on the condition that they met a number of criteria set out in Schedule II of the MPRDA. But even then, mining companies and such ‘communities’ would also be ‘encouraged, where deemed appropriate, to convert the interests of communities into equity’ (Ministry of Finance 2008, p. 3). Thus, the notion of a marginally redistributive ‘developmental royalty’ was effectively terminated in favour of more privatised forms of ‘community shareholding’ that would radically reduce the range of the social categories potentially benefitting from the new minerals dispensation to those that were not only directly affected by mining operations, but were able to negotiate complex equity deals with corporate capital. In the final analysis, the logic of the bourgeois reform had now trumped the original intent of social justice.
Conclusion
This article has set out to develop a materialist analysis of the ANC's post-apartheid minerals policy. Its focus has been on the main measures of the MDB and their contestation in the passage to the MPRDA and its adjunct legislation. Three arguments have been advanced. First, despite its apparent radicalism, the MDB's core proposal to nationalise mineral rights should be conceived as a variant of what Marx terms a ‘Ricardian reform’. As such, it was an essentially bourgeois measure designed to accelerate accumulation in the national mining industry by eliminating the barriers to investment posed by private minerals ownership. Second, however, the MDB also aimed to transform the racial structure of mine ownership along with other social goals. In attempting to marry a classical bourgeois reform with a nationalist commitment to social justice, the MDB must also be understood as a product of South Africa's political transition in the era of neoliberalism. Finally, the platinum industry was the primary target of the MDB. This was not only due to the fact that platinum had emerged as the fastest growing component of the national mining sector with the greatest concentration of unutilised mineral rights, but also that these rights were exclusively controlled by the established (white) platinum producers – the essential element of an industry-wide accumulation strategy. The ensuing struggle over the final form and benefits of the new minerals dispensation would thus be centred on the platinum mining industry. Fought out across a number of different terrains, this contest would eventuate in legislation which kept the core principles of the MDB intact while making key concessions, above all on the extent and pace of BEE and the magnitude and purpose of the new state royalty. Inevitably, however, the implementation and effects of this legislation would prove no less contested and contradictory. It is hoped that the analytical approach suggested by this article will contribute to the investigation of the subsequent trends and tensions.
Note on contributor
Gavin Capps is a postdoctoral research fellow in the National Research Foundation Research Chair in Land Reform and Democracy in South Africa at the Centre for African Studies, University of Cape Town. His current research is on the new processes of rural social differentiation and struggle that are being set in motion by the expansion of platinum mining activity in the former homeland areas of the North West and Limpopo Provinces, South Africa.