Digging for answers

2011-02-05 14:18

Thousands of investors will put South Africa’s mining sector under the microscope this week as concerns over the nationalisation of mines linger on a year after the ­topic first made headlines.

More than 4 000 delegates will gather at the African Mining Indaba in Cape Town to hear if South Africa is on the path to nationali-sing mines that previously ­belonged to private investors.

Last year the ANC Youth League used the gathering to push for ­nationalisation. At its national general council in September the ANC announced it would appoint two senior researchers to investigate successful models of the role of the state in mining.

The threat of nationalisation is not the only topic expected to ­dominate the agenda. Concerns over security of tenure, questions around the issuing of prospecting licences, the slow pace of transformation, mine accidents, environmental issues, tax and royalties on mining and possible restriction of coal exports are also likely to be ­debated at the conference, which starts tomorrow and ends on Thursday.

Nchaka Moloi, the chairperson of the SA Mining Development Association, a mouthpiece for junior miners, said he did not believe the government would adopt a blanket nationalisation policy.

“My view is that since South ­Africa is a constitutional democracy, we won’t go the route of blanket ­nationalisation. I think the government will establish a state-owned mining company that will exist alongside the private sector,” Moloi said.

He said South Africa was likely to fashion its involvement in mining on Chile’s successful model. Chile’s thriving state-owned ­mining company competes and co-exists with mining multinationals such as BHP Billiton, Anglo American and Xstrata.

Jacinto Rocha, a former deputy director-general of the mineral ­resources department, ­echoed Moloi’s sentiments.

“Section 25 of the Constitution says you cannot expropriate without compensation. The question is: does the state have the money to compensate? It is highly unlikely that the state will nationalise mines,” said Rocha, who is now a mining law consultant.

At the end of March last year the combined market capitalisation of the country’s top 25 mining houses had reached R1.8 trillion.

The government has already set up a state-owned mining company, which some commentators believe could be used as a vehicle to ­nationalise mines.

Investors at the mining indaba will also try to get assurances on security of tenure from Mining Minister Susan Shabangu, who will be one of the keynote speakers.

Fears around security of tenure stem from ongoing disputes ­between the state and iron ore producer Kumba and platinum miner Lonmin. The companies are challenging the state for controversially granting prospecting rights to politically connected companies Imperial Crown Trading and ­Keysha Investments respectively over areas they were mining.

Rocha said investors did not need to worry about security of tenure as property rights in South Africa were legally protected.

“If one wants to play politics and spread propaganda then there is a threat to security of tenure. However, if you understand the South African law, which includes the Constitution and administrative law, then security of tenure is not under any threat,” said Rocha.

But Roger Dixon, chairperson of consulting engineers and scientists SRK Consulting, said investors were worried about nationalisation and security of tenure.

“Recent talk of nationalisation of mines, uncertainty about security of tenure and questions around the issuing of prospecting permits have all had a dampening effect on morale in our mining sector.

“It also makes our industry less attractive to the skills and resources we need to develop it,” he said.

Anna Mokgokong, chairperson of black-owned junior miner Namane Resources, said she was ­hoping to meet potential partners and funders at the mining indaba.

She said scarcity of funds in South Africa made black investors targets of predatory white-owned mining companies.

“If you come with no money some of these bullies come with their big cheques and walk all over you. There have been instances when we were offered bakkies in return for our mining rights. We refused because we knew the value of our assets,” Mokgokong said.

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