South Africa mining bill sparks controversy

Published: 18 September 2013

JOHANNESBURG - South Africa is open to amending a controversial mining bill that has alarmed the industry at a time when mining companies are already battling on several fronts, government members have said.

Speaking at the Financial Times alongside Kgalema Motlanthe, the deputy president, and Pravin Gordhan, finance minister, Susan Shabangu, the mining and energy minister, said the government remained "open minded" about how it reaches some of its goals.

It was continuing negotiations with mining companies, unions and other stakeholders as parliament opens debate on the bill, she said.

The bill, which among other issues seeks to promote employment by encouraging greater manufacturing of raw materials, falls at a time that rising electricity costs, deepening mine shafts and stagnant productivity already threaten the commercial viability of some mines.

Tension with workers over wage settlements was eased by a pay deal with one union this month. Legal experts and mining companies have been at loggerheads with the mines ministry over certain clauses in the bill, which they say contravene the constitutional provisions on property rights and would deter fresh investment by forcing companies to sell raw materials at a state determined price.

The new bill would also interfere with trade and bilateral investment treaties, including with the UK, and could if passed in its present form lead to South Africa being sued on multiple fronts, according to Peter Leon, a global expert in mining law based in South Africa.

The bill, as it stands, aims to do this by allowing the mines minister the discretion to determine the quantity and set the price at which mining companies sell to local industries.
- FT

Tags: Mining,