De Beers said on Tuesday that South Africa’s new minerals bill must deliver fiscal certainty and security of tenure if the mineral-rich country is to lure much-needed investment, Reuters reported.
De Beers is the latest company to voice concerns over the draft Minerals Development Bill which proposes to vest mineral resources in the state and stop companies from hoarding mineral rights under a ‘use it or lose it” policy.
Managing Director Gary Ralfe said he was not opposed to vesting mineral rights in the state, as is currently done in Botswana and Namibia, where De Beers has major interests.
“But in return the private sector in South Africa, like in those other countries, is entitled to expect an automatic reward of unconditional 25-year mining leases where it meets objective criteria, like not infringing government’s ‘use it or lose it’ policy,” Ralfe told a mining conference in Cape Town.
The bill, which is open to public comment following its release in December, aims to create a more level playing field to lure foreign investors, and knock down barriers to access for previously excluded blacks.
But analysts say the legislation gives the minister a wide range of discretionary powers, including the right to expropriate any property for the purpose of prospecting or mining, and to refuse a mining right if it is not in the “national interest”.
The minister can also determine whether a business or development plan for a property is adequate, and intervene if a mine becomes unprofitable and jobs are threatened.
Ralfe said mining investment requires fiscal certainty and transparency due to the lengthy lead-in times and huge scale of projects.
South African Minerals and Energy Minister Phumzile Mlambo-Ngcuka, who also spoke at the conference, has tried to calm the fears of mining companies and promised to test the final version of the bill before the country’s constitutional court.