/ 21 December 2000

Mining industry frets as State eyes minerals

DARREN SCHUETTLER, Pretoria | Tuesday

THE South African government has unveiled a draft minerals law aimed at redressing a century of white dominance of the mining industry, drawing a swift statement of concern from big mining companies.

Minerals and Energy Minister Phumzile Mlambo-Ngcuka said the Minerals Development Bill would vest the country’s vast minerals resources in the state and would guarantee the security of tenure mining firms have vowed to defend.

The bill would create a more level playing field to lure foreign investors, stop firms from hoarding mineral rights and open the country’s mineral wealth to previously excluded blacks.

”This draft bill will… recognise that mineral resources are the common heritage of all South Africans and collectively belong to all the people of South Africa,” Mlambo-Ngcuka said.

South Africa is the world’s biggest producer of gold and platinum and a leading miner of base metals, diamonds and coal.

The Chamber of Mines expressed concern about three key issues and would ”vigorously” pursue them with the government. It was concerned about the constitutionality of some parts of the bill, its impact on existing mining activities, and security of tenure for all investors.

The chamber includes most big miners, such as world number one gold producer AngloGold Ltd, Anglo American Plc and platinum giant Anglo Platinum.

Mlambo-Ngcuka said the draft law, which would probably be revised after public review, ensures security of tenure for existing active mining and prospecting operations.

The bill also entrenches the right of the state to exercise full sovereignty over mineral resources and promote black empowerment and community development.

”In the event that the proposal for the draft bill amounts to expropriation of property the state will pay compensation as required by the constitution,” Mlambo-Ngcuka said.

The industry is particularly worried about a ”use it or lose it” portion of the bill, which would prevent companies from hoarding mineral rights.

South Africa is one of the few countries in the mining world that has a system of dual state and private ownership of rights.

Critics say this system allows big companies to hold rights with no immediate intention of using them and discourages small-scale mining, a key industry growth area.

The bill would also abolish the regulatory Diamond Board, which oversees South African gem exports and has clashed with industry giant De Beers over pricing issues.

The board’s responsibilities will now fall within Mlambo-Ngcuka’s department and South Africa’s Revenue Service.

Mlambo-Ngcuka said companies which had not paid royalties in the past would now be required to pay the state. She said the payments would be determined on a case-by-case basis. – Reuters