Perhaps an odd perspective on the nationalisation debate, raging in political circles but its my honest opinion. “Nationalisation will occur inevitably unless investors demand a blended value (social / environmental and financial return) approach and mines stop externalising the environmental and social cost as part of their licence to trade’”.
It’s my belief that as mining companies continue to externalise the environmental (pollution, waste, etc) and social cost of extracting minerals out of the ground, nationalisation is foregone conclusion over the medium term.
In my mind there are three driving forces which will force nationalisation:
1. The political pressure to consolidate natural resource assets, therefore increasing government revenues and increasing the already limited social services to our poorest people.
2. Once mining companies have completely polluted our rivers, induced cancer, displaced citizens, and close down local economies once they close themselves, the state WILL force them to cost these problems into their price. Shareholder value in the long term will be dire, and investor’s most profitable route will be to sell to the only entity that will actually purchase the assets. Government!
3. In an emerging market, so reliant on natural resources, we cannot have ‘pure profit’ entities / leaders in a sector which must provide social / responsible leadership as much as financial. Eskom has faced similar choices in a macro system, where it is so explicitly connected to society.
I do believe that the end of mining companies ‘as we know it’ is nigh … The mining sector CAN be a force for change, if only it were in the hands of ‘change-makers’ and the balance of blended value can be found in all its stakeholders. It makes me sick when I here record profits for mining companies, whose assets are listed/traded and owned in foreign countries. If Mohammed Yunus, can change the role of banking as we know it, where are our change-makers to light the path in our time of need?
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