A battle is brewing over control of South Africa’s key mining sector.

Julius Malema, president of the Youth League of the ruling African National Congress (ANC) has long called for the nationalization of the country’s mines as the “only solution” to the economic problems faced by ordinary South Africans. The ANC agreed last year to officially debate and consider such a state seizure of assets.

Criticism of the idea has already come fast and furious from various quarters.

“Mining companies simply will not invest if they cannot be assured that the assets they create will be secure,” said Cynthia Carroll, chief executive of mining behemoth Anglo American PLC, at the Indaba mining conference in Cape Town. “In ignoring this truth, the false prophets who argue for nationalization are advocating the road to ruin - a path we must not follow.”

She also cautioned that if South Africa carried out a nationalization scheme like its neighbor Zimbabwe has, the country would miss out on the commodities boom and worsen unemployment.

Carroll cited that countries that have nationalized such assets, like Mexico and Venezuela, “do not exemplify great success through their nationalization.”

Similarly, South African’s Minister of Mineral Resources Susan Shabangu rejects the idea of mining nationalization as “not an option.”

Is nationalization going to give us jobs? No. We have got to make sure that we become responsible and we attract more investments, because we do need investments in South Africa,” Shabangu told reporters. We have a boom in the mining sector. We can't afford to miss this opportunity.

In response to the mines minister’s remarks, The ANC Youth League stated “Shabangu is making false assurances and altogether making the ANC process to be undermined.”

The Youth League also dismissed Carroll’s remarks as “the ranting of capitalists” and added that she is “not a member of the ANC and knows nothing about what is happening in the organization, so she should stay away from conclusively speaking about ANC policy direction,”

It appears for now that the movers and shakers in South Africa’s mining sector are not overly concerned by the agitation by some wearers of the ruling party to nationalize the industry.

Mick Davis, chief executive of mining giant Xstrata (Nasdaq: XSRAY) told the British newspaper, The Daily Telegraph: “The [South African] government is very clear that nationalization is not part of ANC policy. “Ms Shabangu has been very consistent on this – as has the president.”

According to press reports, Anglo American is the single biggest private sector employer in South Africa; while the mining industry represents 8 percent of the nation’s economy. Anglo-American alone is believed to generate 2.5 percent of the GDP.

Moreover, data from SouthAfrica.info indicate that South Africa possesses nearly 90% of the platinum metals on Earth, 80% of the manganese, 73% of the chrome, 45% of the vanadium and 41% of the gold.

The country is also the world’s second biggest gold producer behind China.

Citibank NA places the value of South Africa’s total mineral reserves at a cool $2.5-trillion.

At the Indaba mining conference, Shabangu spelled out the mining sector’s problems and strengths.

The mining industry is expected to grow at an average 4 percent to 7 percent in volumes terms in 2011, and is thus recovering to the levels preceding the crisis, she said. “The mood of the commodities outlook session of yesterday afternoon confirmed our view of a positive outlook in a short to medium term, even though the euro-zone economic situation remains a dark cloud over the global recovery pace.

However, she added that she is “concerned about the lack of investment into research and development in this sector. Notwithstanding the pockets of excellence in a handful of research initiatives, the South African mining industry features at the lowest ebb relative to high performing jurisdictions in terms of growth.

What’s more, she urged the mining industry to seek ways to improve the efficiency of water and energy usage.

This industry is water and energy intensive, and in a country where the demand-supply balance of these critical commodities is fairly precarious, she noted.

It is therefore important that efficiency with which we consume both is expeditiously ramped up.