S. Africa Mining Industry Sees Possible Deal on Amending Law

South Africa’s mining industry sees a possible agreement with the government over proposals to force producers to process part of their output within the country and secure some resources for domestic consumers.

“Further engagement is required to resolve or minimize the areas of concern and further meetings have been scheduled,” the Chamber of Mines, the main group representing the industry, said today in a submission to lawmakers. “Many of these concerns if not all could be addressed in the bilateral process.”

Parliament’s mineral resources committee is holding public hearings on planned changes to the 2002 Mineral and Petroleum Resources Development Act, aiming to boost processing in South Africa and declare some output strategic to the country. Mining companies operating in the nation including Anglo American Plc have said the law would affect their businesses negatively and give the mining minister too much regulatory discretion.

“Legislative changes are necessary,” Roger Baxter, an official from the chamber, said today in an interview. “We agree with a number of components that have been proposed. We also disagree or have different views on others.”

Industry is being won over to the government’s proposals, which aren’t expected to hurt investment in the country, Musa Mabuza, deputy director-general of policy and promotion in the Department of Mineral Resources, told lawmakers on July 30.

Biggest Producer

South Africa, the world’s biggest producer of platinum and chrome, is home to assets operated by companies including BHP Billiton Ltd. and Glencore Xstrata Plc. The government received 80 responses to the planned changes to the law it published in December before submitting draft legislation to Parliament.

“When the department brought the bill to the committee, it emerged there were huge areas which had not been properly nailed down,” James Lorimer, a lawmaker with the opposition Democratic Alliance, said in an interview. “If the law is still a work in progress, why have they then brought it before Parliament?”

Hearings on the bill are scheduled to continue on Sept. 18. The chamber urged lawmakers to suspend processing the draft to allow the industry to conclude talks with the government.

Peter Leon, head of Africa mining and energy projects at law firm Webber Wentzel, told politicians some provisions may be in violation of the Constitution and international treaties.

The local mining industry shrank by an average of 1 percent a year, adjusted for inflation, during the 2001 to 2008 global boom in commodities, compared with the average 5 percent growth of the top 20 mining economies, according to data compiled by the chamber, which blames a lack of clear policy, labor unrest and inadequate transportation and power infrastructure.

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