JOHANNESBURG (miningweekly.com) – The debate around the nationalisation of South African mines had created "great uncertainty" with investors, and could even see the development of some projects essentially been put on ice, until after the ruling African National Congress' (ANC's) policy review conference in 2012.

This concern was raised at the Terrapin Africa Mining Congress 2010 in Johannesburg on Monday.

Webber Wentzel partner Peter Leon said that regulatory issues only played a secondary role to geology when it came to the mining industry, and that uncertainty around regulatory issues could often be detrimental for a country's mining sector.

As such, South Africa's mining industry dropped from being in the top 50% of preferred investment countries on the continent, to the bottom ten on the latest Fraser Institute's report.

Mining junior BSC Resources CEO Bongani Mtshisi said that investors were not prepared to lend money to projects in South Africa without the guarantee that these investments were secure.

"We even had some questions raised around the nationalisation issue when trying to raise finance for a project in Namibia, because of its proximity to South Africa," he added.

Leon said that even though it was clearly stated by South African President Jacob Zuma and Mineral Resources Minister Susan Shabangu that nationalisation was not part of government policy at the moment, this did not guarantee that it would not become part of government policy in two years time.

He noted that the ANC Youth League managed to get it onto the agenda of the governing party's next meeting in September, which fuelled concerns.

However, Leon said that government had recently made a commitment to create an environment for greater competitiveness in South Africa's mining industry, and said that the "whopping" compensation bills that would be placed on the shoulders of government through the nationalisation of mines would not go unnoticed.

"There are many ways to skin a cat, and the creation of a sustainable State-owned mining company is one way to do this.

"The problem is that the direct benefit of mining in certain countries oftentimes do not flow through to the people of the country, and this is the issue that needs to be addressed," said Leon.

The Tanzanian Chamber of Minerals and Energy executive secretary Emmanuel Jengo agreed saying that often times mining companies come in from other countries and then leave local communities with a marginal percentage of that which was taken.

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