Law firm, Eversheds SA, has said that an increasing effort amongst countries to harmonise intra-African laws will thwart the efforts of miners looking to cherry pick those countries with more investor-friendly regulations.
"Recently, there's been much criticism placed on the South African mining regulatory environment as being too stringent with BEE requirements, health & safety penalties to name a few, with many suggesting that the country's regulatory system is discouraging foreign investment into the country" said Debbie Ntombela, Head of Mining at Eversheds SA.
This was confirmed recently at a Mining Dialogues 360° summit hosted by the Royal Bafokeng Nation where one of the main take away points was that the damage to investment being caused by this continual debate was being underestimated.
A frustrated representative from Merrill Lynch went so far as to say that he was seeing the deal postponement instructions crossing his desk.
In addition to this, delegates attending the dialogues said that although it had not been explicit, anecdotal pointers were being made by government in relation to emerging players from China and Brazil that would strike deals in the current policy environment, effectively displacing existing players.
The three-day long dialogue between labour, government, industry, investors and civil society was held in an effort to produce a document incorporating opinions and recommendations reached to put forward to government ahead of the Manguang meetings in December. Notably, government representatives invited did not attend the debates.
But, The frustration displayed is unlikely to be met by a redirection of funds to other countries on the continent where conditions are less onerous believes Eversheds SA.
The reality, said Eversheds, is that Africa is moving towards a synergised legal system that speaks to Africa's common objectives which include the upliftment of the poor, respect of the environment and adherence to health and safety standards.
"Companies looking to escape South Africa's ‘onerous' obligations may be sorely surprised that other parts of Africa are initiating and imposing similar standards on its investors" said Ntombela.
Ntombela illustrated the point by referring to the on-going collaboration between the United Nations Economic Commission for Africa, Southern Africa office and the Southern African Development Community (SADC) to implement the SADC Mining Protocol, which calls for member states to harmonise and align mining policies and administrative and regulatory frameworks.
In addition to this, Ntombela pointed to the Organisation for the Harmonization of Business Law in Africa which has been adopted by sixteen West and Central African nations.
"The rate at which such harmonisation occurs will provide multi-national companies an opportunity to look for ‘greener pastures' elsewhere in Africa, but in the long term there is little doubt in my mind that foreign companies will be faced with very similar challenges in other parts of Africa, especially as Africa looks to maximise the benefit it receives from foreign investment," concluded Ntombela.
Luke Danielson, an international facilitator at the Mining Dialogues 360° event, suggested that with debate in the country centred around national policy, a bottom up approach should be adopted.
"If the national debate is frozen, turn to the leadership of communities to be consulted" said Danielson in encouragement of more innovative ways to create more social benefits at floor level so to speak.
"When stakeholders come to agreement government suddenly appears. Build consensus at a community level and government should follow" said Danielson.
Article published courtesy of Mineweb. For more daily news and comment on the global mining sector click here.
Image: The Nambian