Miners Frozen Out as South Africa Readies Empowerment Rules – by Kevin Crowley and Paul Burkhardt (Bloomberg News – May 31, 2017)

https://www.bloomberg.com/

Mining companies in South Africa have been frozen out of consultation over regulatory changes that could dilute shareholders, raise costs and impose new levies to fund community development.

South Africa’s Cabinet last week approved a new draft of the country’s Mining Charter and President Jacob Zuma said Wednesday it will be gazetted within weeks. Yet while labor leaders have been consulted on the long-delayed new rules, the Chamber of Mines, which represents producers, says it “does not have any insight” into the latest version and hasn’t met government officials on the subject since March.

The looming dispute threatens to prolong uncertainty and further slow spending in South Africa’s biggest export industry. Fixed investment in mining dropped in each of the past two years and companies including Sibanye Gold Ltd. have warned that any new investment will be a tough sell in the current environment.

“The government and the Chamber of Mines haven’t really sat down on this issue, and much of the public discourse has been posturing by both sides,” said John Meyer, a London-based analyst at SP Angel Corporate Finance. The industry may head to court if government imposes harmful changes, the Chamber said this month.

South Africa holds the biggest reserves of platinum, chrome and manganese. In 2010, Citigroup Inc. valued the mineral wealth at $2.5 trillion, the most of any nation. Mining companies including Anglo American Plc, Glencore Plc and AngloGold Ashanti Ltd. operate in the nation.

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