South Africa’s government is committed to expanding its mining industry in the face of power cuts and depressed commodity prices, Mineral Resources Minister Ngoako Ramatlhodi said.
“South Africa is ready for investment,” Ramatlhodi told the Investing in African Mining Indaba in Cape Town Tuesday. “We are leaving no stone unturned in providing a stable environment for investment.”
An electricity shortage in the continent’s second-largest economy has stifled new mining projects over recent months, and the problem has been compounded by labor unrest and proposed changes to the mineral laws. South Africa is the world’s biggest producer of platinum and seventh-largest of coal.
The government will quickly finalize changes to the Mineral and Petroleum Resource Development Bill, which is key to unlocking investment, and will draft separate legislation to regulate the oil and gas industry, Ramatlhodi said.
“We are open to short-term arrangements, provided they produce required outcomes,” he said. “I want to bring finality on this one way or the other.”
President Jacob Zuma last month declined to sign changes to the 2002 act on the grounds that they may violate the constitution and referred them back to Parliament.
Proposed changes to the law include giving the state the right to a free 20 percent stake in all new energy ventures and to buy an unspecified additional share at an “agreed price.” Exxon Mobil Corp. and Total SA are among companies that have objected to the proposals on the grounds that they’re too vague and will undermine their businesses.
The government is also committed to discouraging violent labor action and doesn’t expect a repetition of protracted strikes that have crippled the platinum industry, according to the minister.
“We would hope the industry would also assist us,” he said. “Where people break the law as they do, we will arrest, we will charge and we will send them to jail.”
A strike at the South African operations of the world’s biggest platinum producers lasted five months last year, crimping output and growth.
The minister “is going out of his way to restore confidence in the industry,” Peter Leon, head of Africa mining and energy projects at law firm Webber Wentzel, told reporters in Cape Town. “It’s more carrot and less stick. This is a much more facilitative approach to the industry.”
Ramatlhodi reiterated the government’s intention to establish a new South African mining conglomerate that could potentially buy assets sold by companies such as Anglo American Plc and BHP Billiton Ltd.
The new company, which could focus on one or more commodities, “will be community-based with a strong worker participation and anchored and run along business principles,” he said. The minister didn’t spell out how the new entity would be financed.
Amplats, as the Anglo American Plc unit is known, is selling some of its aging, deeper-level operations as it increases production and capital spending at its mechanized Mogalakwena pit, the world’s lowest-cost platinum mine.
BHP is spinning off assets including its silver, manganese and aluminum operations to focus on larger businesses such as iron ore. The new business is known as South32.
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.