The Italian owners of two granite firms are suing South Africa for â,¬266-million (about R2,5-billion), arguing that laws which force firms to sell stakes to black investors violated international investment treaties, the investors’ lawyer said on Friday.
The action marks the first legal action alleging that South Africa’s mining charter, which seeks to boost involvement of black people in a sector that excluded them during apartheid, amounts to expropriation.
”We are saying that these Italian investors are unfairly discriminated against in relation to BEE [black economic empowerment]) investors in South Africa,” lawyer Peter Leon said.
After unsuccessfully seeking compensation from the government, the two Italian-owned firms — Finstone S.a.r.l. group and RED Graniti Spa — have been granted compulsory international arbitration by an arm of the World Bank, he said.
Leon said the legal action is not challenging the overall concept of trying to make up for the injustices of apartheid, but the Italian investors bought the granite operations in 1994, after the collapse of apartheid.
”Why are foreign investors, who never invested here before 1994, who never benefited from the apartheid system, why are they subject to this form of redress? I don’t think that’s fair.”
Officials at the mining ministry were not immediately available for comment.
Injustices of apartheid
South Africa’s mining charter, implemented in 2004, transfers all mining rights to the government and demands mining firms meet a list of conditions before obtaining new mining licences.
The conditions include selling 26% of local mines to black investors by 2014, increasing numbers of black managers and improving conditions in mining communities.
The laws seek to make up for injustices in South Africa’s mining sector, which was built on a legacy of migrant black labourers who were paid dirt-cheap wages, forced to live in single-sex hostels and prohibited from skilled jobs.
Leon said the legal claim is based on bilateral investment treaties that promise fair and equitable treatment to all investors and allow for compensation if the government expropriates investments.
The hearing by the World Bank’s International Centre for the Settlement of Investment Disputes in Washington was expected to be held later this year.
Major South African mining companies support the empowerment programme although some have complained about delays in approving new licences or have disputed some specific decisions.
Anglo Platinum took legal action last year in South African courts after the mining ministry refused four prospecting licences, but the case challenged the terms of the rejection rather than making claims of expropriation. – Reuters