The Chamber of Mines has reported back on its AGM. The industry is forfeiting R5-10billion a year in fixed investment because companies could not invest in projects without legal title. 20 000 jobs have also been dropped in the last two years.
A survey undertaken by the Chamber in July found that (I've only included those aspects that impact on regulation and empowerment), almost all respondents expressed concern about regulatory constraints affecting investment in the mining sector.
Respondents also highlighted
- delays in issuing new or converted mining rights,
- additional red tape in interpreting the empowerment requirements of the mining charter,
- delays in processing water rights.
The DME disputes that one single factor (like regulation) is the reason for the decline (read about it in the Business Day).
Lazarus Zim, chairman of the Chamber, pointed out some interesting statistics about the mining sector.
- contributes 16% to the GDP
- contributes 50% of merchandise exports
- amounts to 12% of the country's fixed investment
- employs 20% of the country's formal sector working population
Last year, the sector employed 442 000 people (amounting to about 5 million dependents) and paid 36.4billion in wages and benefits.
On the subject of regulation
Zim confirmed that the Chamber was trying to find a solution to the industry's concerns about appropriate compensation for mining rights that were lost through the implementation of the Minerals and Petroleum Resources Development Act. The act has replaced old order rights (which were in perpetuity) with new order rights (only for 30 years). Companies have to re-apply for new order rights and the deadline is April 30, 2007.
The problem lies in trying to figure out the loss incurred by converting the rights from a perpetual to a limited term. Zim would prefer the companies not to resort to litigate, but Peter Leon of law firm Webber Wentzel Bowens speculates that the only way to get compensation will be through the courts.
It's not as though the DME hasn't got enough problems with existing litigation on their delay to issue prospecting rights.
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