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South African Provinces Adopt Oil Law Changes Opposed by Exxon

South Africa’s National Council of Provinces approved changes to oil and mining laws that will give the state a free stake in new energy ventures and may force some mining companies to sell part of their output to local manufacturers.

The adoption of the amended Mineral and Petroleum Resources Development Act by Parliament’s second chamber at a sitting in Cape Town today clears the way for it to be signed into law by President Jacob Zuma. The National Assembly approved the measure on March 13.

With elections scheduled for May 7, the ruling African National Congress is pushing for the state to play a bigger role in the economy to try ensure the nation benefits more from its mineral endowment. South Africa is the continent’s largest coal and gold producer and the world’s biggest platinum supplier.

The law will secure the state a free 20 percent stake in all new energy ventures and enable it to buy an unspecified additional share at an “agreed price.” It will also enable the mines minister to declare minerals as strategic and require that supplies be made available to local producers “at mine gate pricing or another agreed price.”

While the Chamber of Mines, the main industry body, has backed the law, oil companies including Exxon Mobil Corp., Anadarko Petroleum Corp. and Total SA say it will undermine their businesses and deter investment.

Seven provinces voted in favor of the law. The Western Cape, the only one of the nine provinces controlled by the opposition Democratic Alliance, opposed the measure, while the Eastern Cape abstained.

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