ANCYL’s views ‘a worry to mining’

2010-09-04 09:33

The attitude of the ANC Youth League (ANCYL) was “scary” and “a huge embarrassment” for South Africa, said Michael Blakiston, a partner in Australian law firm Blakiston & Crabb.

Addressing the Africa Down Under conference in Australia, Blakiston said the mining industry would be putting itself at risk if it just “put the ANCYL into a far-left radical basket”.

Blakiston was generally positive about black economic empowerment (BEE) legislation, but he raised concerns about the issue of BEE “morphing into ­nationalisation”.

“We, as an industry, need to be firm and vocal in our stance.

“We know what happens when you nationalise a mining industry. Look at other countries in ­Africa,” he said.

Blakiston’s comments were made against the backdrop of growing unease in the Australian and South African mining and ­investment communities over recent events in South Africa.

The developments at Kumba Iron Ore and Lonmin, where prospecting licences have been granted to third-party firms over parts of their operating mines, have caused particular concern.

Gold One International CEO Neal Froneman said on the sidelines of the conference that “there is a huge concern over perceived hijacking of mining rights following the events of the past few months.

“Questions being put to me by investors are now focused on these broader issues rather than the operational specifics of my gold mines,” Froneman said.

“The sort of questions we are fielding are all about how these developments might affect us.”

Blakiston did not refer specifically to Kumba or Lonmin, but he commented that “it sends a cold shiver up everybody’s spine to know that title can be lost.

“That sort of thing is a real dampener on investment.”

He cited the examples of First Quantum in the Democratic ­Republic of Congo and ­issues ­relating to the make-up of the 26% equity BEE ownership ­required in South Africa.

Blakiston said there was keen interest in the outcome of the ­review of the Mining Charter, which Minister of Mineral ­Resources Susan Shabangu said on Wednesday was due “within 10 days”.

He said BEE legislation had to be viewed against the country’s history, in particular its evolution into a representative ­democracy from 1994.

“South Africa has developed a BEE programme to achieve an ideological objective. This is not to be criticised. When you invest in South Africa, you know the rules,” said Blakiston.

He said the South African perspective was that BEE created “an integrated and coherent ­socioeconomic process that will directly contribute to the economic transformation of this country and bring about significant increases in the number of black people that manage, own and control the country’s economy, as well as significantly ­decrease income inequalities”.

But Blakiston warned: “This perspective does not apply ­everywhere. BEE is often seen as playing the black card to take more from a project and to ­transfer to the mining company many of the responsibilities of government.”

He highlighted the difficulties and penalties imposed on mining companies in funding the 26% stake in their projects ­allocated to BEE partners.

“It should be up to government to take the revenues received from mining and distribute them equitably among the people,” he said.

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