South Africa is deterring external investment in the country's mining industry through its unfriendly legal framework, a law firm has claimed.

According to Mining Weekly, Bell, Dewar & Hall boss Andrew Mitchell told the 2006 Mining Indaba conference in Cape Town last week that the country is falling behind in the race for external investors.

Mr Mitchell claimed that the legal and fiscal framework in the country was prompting possible investors to look elsewhere, meaning that Africa's leading mining country is not receiving sufficient funding for new projects.

The country's new Mineral and Petroleum Resources Development Act was a main feature in turning companies away, he claimed, and added that the current surge in worldwide mining equity was in danger of passing South Africa by.

Mr Mitchell also highlighted the 50 per cent rate of mineral-rights conversions, troublesome tax and labour laws, and difficulties from land claimants as reasons for the lack of current investors.

Speculation is currently rife that the South African government is set to overhaul its legislation governing Black Economic Empowerment (BEE), which has been labelled as prohibitive to investors by some analysts.

Reports in the Times last month suggested that deputy president Phumzile Mlambo-Ngcuka is planning a major change to existing BEE rules.

BEE was designed to enfranchise the indigenous people said to have been excluded from the emerging economic wealth of the country, with the aggrandisement of the mineral wealth and natural resources in the country – including platinum – remaining a high-profile and sensitive issue.

Ms Mlambo-Ngcuka is said to be looking to stimulate economic growth and it is thought that she will aim to kickstart the economy by easing up on the rules currently binding many of South Africa's biggest firms.



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