CAPE TOWN (Reuters) - South Africa’s cabinet approved a long-delayed mining charter that sets out requirements for black ownership levels and backed the withdrawal of a mining bill after industry opposition, a minister said on Thursday.
The mining charter - which was introduced to redress the exclusion of black people in the mining sector under apartheid - could, however, still be the subject of legal challenges if mining companies are unhappy with its contents after it is published.
Communications Minister Nomvula Mokonyane said more details about the charter would be announced on Friday by President Cyril Ramaphosa when he unveils a new economic stimulus package, to kick-start economic growth.
Policy uncertainty has stifled investment in the mining industry of Africa’s most industrialised economy, which has also faced a wave of job cuts during a downturn in commodity markets, high wage costs and a volatile labour environment.
“The mining charter was deliberated upon and indeed cabinet has approved the mining charter,” Mokonyane told reporters in a briefing on Thursday, following a cabinet meeting on Wednesday.
Mokonyane also said the cabinet backed the withdrawal of the Mineral and Petroleum Resources Development Amendment (MPRDA) bill, which would have given the state a 20 percent minority stake in new gas and oil exploration and production ventures, which the industry had said would discourage investment.
Analysts say addressing policy certainty in the mining sector could lead to billions of dollars of new investment.
“On both scores it will be beneficial to the investment climate, because until now there has been hesitation to invest in the sector because of the regulatory uncertainty,” said Lloyd Christie, a mining lawyer at ENS Africa.
The Minerals Council, which represents South African mining companies, says policy and regulatory certainty could potentially add 122 billion rand ($8 billion) in capital expenditure to the struggling mining sector over the next four years.
“We will be able to comment when we see the final document,” a spokeswoman for the Minerals Council said.
Amendments to the MPRDA bill were passed by parliament four years ago but the draft law was sent back to lawmakers by former president Jacob Zuma in 2015 due to concerns over whether they were constitutional.
The bill would have allowed the mines minister to require that a portion of extracted resources be processed domestically and not be exported in raw form.
Sean Lunn, chairman of the Offshore Petroleum Association of SA (OPASA), told Reuters the group would support a separate Act governing the upstream petroleum industry “that will encourage and unlock investment.”
OPASA members include ExxonMobil Total, Shell Anadarko, ENI and Statoil.
($1 = 14.4826 rand)
Editing by James Macharia and Susan Fenton