Miners out in cold as harsh rules loom

MINING companies in South Africa have been frozen out of consultation over regulatory changes that could dilute shareholders, raise costs and impose new levies to fund community development.

Last week, the cabinet approved a new draft of the country’s Mining Charter and Mineral Resources Minister Mosebenzi Zwane has promised it will be gazetted within weeks.

Yet while labour leaders have been consulted on the long-delayed new rules, the Chamber of Mines, which represents producers, says it “does not have any insight” into the latest version and hasn’t met government officials on the subject since March.

The looming dispute threatens to prolong uncertainty and further slow spending in SA’s biggest export industry.

Fixed investment in mining dropped in each of the past two years and companies, including Sibanye Gold, have warned that any new investment will be a tough sell in the current environment.

The industry may head to court if the government imposes harmful changes, the chamber said this month.

South Africa holds the biggest reserves of platinum, chrome and manganese. In 2010, Citigroup valued the mineral wealth at $2.5-trillion (R32.8-trillion), the most of any nation.

The industry is particularly concerned about changes to black ownership requirements. Zwane shocked the sector last year with a draft charter that would require much of the industry to sell additional shares to maintain ownership levels after earlier investors sold their stakes.

The minister has now also proposed raising the minimum to 30% from 26%, two people familiar with the situation said last week.

“We’re not shy if we need to engage government in court processes,” Roger Baxter, the chamber’s CEO, told reporters on May 24. “Government has the same route if they want to follow it.” – BDlive