Eswatini Government Debates Establishing National Mining Company

The Government of Eswatini is considering establishing a national mining company, sparking debate about the economic viability of expanding the public enterprise sector. With approximately 50 public enterprises already under its wing, the government faces concerns over the financial performance of some existing institutions, which rely on government subventions to sustain operations. The proposed mining company would require significant capital investment, specialized technical skills, and an understanding of unpredictable international commodity markets.

Supporters of State participation in mining argue that a national mining company could improve Eswatini's economic fortunes by ensuring that the country and its citizens receive a greater share of the wealth generated from mineral resources. They contend that mineral wealth should contribute directly to national development, employment creation, skills transfer, and economic empowerment of emaSwati. The Coordinating Assembly of Non-Governmental Organisations (CANGO) supports the establishment of the proposed company, with its Executive Director, Thembinkosi Dlamini, arguing that State participation in mining is long overdue.

However, international research raises questions about the financial and operational challenges confronting State-owned mining enterprises, particularly where governments lack the capital, expertise, and commercial independence required to operate successfully. Commissioner of Mines Dr Noah Nhleko acknowledged the existence of differing professional opinions on State ownership in the mining industry, describing such disagreements as normal and important in informing public debate.

The debate is particularly relevant given Eswatini's substantial public enterprise sector, whose financial performance has frequently come under scrutiny. Government provides financial assistance to various public enterprises through subventions intended to support their operations and public service responsibilities. Although certain entities generate revenue and contribute to the national economy, others face operational challenges, financial constraints, and varying levels of profitability.

Experts say a mining company would face additional pressures because it would be operating in a highly competitive international industry. It has been learnt that mining requires more than establishing an institution, appointing a Board of directors, and employing administrative personnel. A national mining company would need a chief executive officer capable of managing complex commercial operations, supported by highly qualified mining engineers, geologists, metallurgists, financial specialists, environmental experts, and professionals experienced in international commodity trading.

Research has shown that the company would also require substantial resources for mineral exploration, feasibility studies, mine construction, machinery, electricity, transportation, mineral processing, and compliance with environmental and occupational safety requirements. Furthermore, mining companies do not determine the prices of the minerals they sell, as international commodity prices are influenced by global demand, supply conditions, geopolitical developments, industrial production, and economic performance in major markets.

A decline in global mineral prices could consequently reduce revenue even where production remains relatively stable, presenting an additional financial risk for any State-owned mining enterprise. The Eswatini National Petroleum Company (ENPC) was recently established, adding to the country's portfolio of State-owned entities. The government will make an official announcement concerning the proposed mining company once the necessary strategies have been developed.

Key points

• The proposed national mining company would require significant capital investment and specialized technical skills to operate successfully.
• Supporters argue that a national mining company could improve Eswatini's economic fortunes and contribute to national development.
• However, international research raises concerns about the financial and operational challenges confronting State-owned mining enterprises.