JOHANNESBURG (miningweekly.com) – The governments of resource-rich countries should base their financial planning on commodity prices that are lower than the year prior.

Should actual commodity prices eventuate that are higher than those assumed, the additional revenue from the higher prices should be treated as a bonus and spent on pursuits that ensure long-term economic sustainability like education, health and technology.

That is the advice given to resource-rich governments by economics and finance superstar Jim O’Neill, who oversaw the investment of $800-billion as the former Goldman Sachs Asset Management chairperson and who coined the acronym Brics, which is a focus on the economies of Brazil, Russia, India, China and South Africa, with South Africa’s resource valuation of $2.3-trillion leading the world, $1-trillion ahead of second-placed Russia.

By assuming that commodity prices, which play crucial economic roles, will be lower, the governments of resource-rich countries can reduce the risk of their mineral endowments becoming curses rather than being the blessings they should be.

Any revenue from prices higher than those assumed then becomes available for investment in long-term economic sustainability.

O’Neill offered his advice immediately after South Africa’s Mineral Resources Minister Ngoako Ramatlhodi told the 7 000 mining professionals attending last week’s Mining Indaba, in Cape Town, of South Africa’s need to use its minerals blessing to rid the country of the triple evils of poverty, inequality and unemployment.

O’Neill, who currently chairs the City Growth Commission – a UK think tank to drive the economic growth of England’s major cities – considers not regarding commodity price rises as inevitable as being crucially important for commodity producing countries.

He also encourages emerging countries to look to the world’s most successful commodity-producing countries for models to emulate.

In this regard, he cites Norway as the country worth mirroring, which is significant because it is also the country that South Africa’s National Union of Mineworkers has over the years held up as one that South Africa should mimic when it comes to optimal societal benefit from resource riches.

O’Neill speaks highly of Norway’s sovereign wealth fund, which he describes as being genuinely focused on long-term returns for its citizens rather than the more common shortcoming of being fixated on short-term commodity price movement.