CAPE TOWN (miningweekly.com) - The nationalisation of the mines debate, which has become a hot topic in recent days, could have a negative impact on attracting foreign direct investment (FDI) into South Africa and raising capital on foreign markets for local mining projects.

While the debate on nationalisation had not had a noticeable effect on the local bourse to date, JSE business development and marketing director Noah Greenhill told Mining Weekly Online that such a public debate was not good for South Africa's reputation as an attractive investment destination.

Greenhill stated that the very public debate on the issue would make it much harder to attract foreign investors and companies to invest in South Africa and to list on the local bourse.

It would be more appropriate to deal with the subject of the nationalisation of the mines within the confines of the African National Congress (ANC) rather than at a public level, he said.

Greenhill's comments follows a spat between the ANC Youth League and Mining Minister Susan Shabangu, who told delegates at the Mining Indaba that the nationalisation of mines would not be adopted "in [her] lifetime".

Shabangu told delegates at the mining conference that the nationalisation of mines was not a government policy.

Subsequently, the ANC said that it welcomed the discussion document on the nationalisation that the ANCYL had submitted to the party and said that it would engage through "proper ANC structures".

Some South African mining companies also noted that the ability to raise capital offshore would also be negatively affected by the heated nationalisation debate.

Speaking to Mining Weekly Online, Witwatersrand Consolidated Gold Resources' (Wits Gold) CFO Dirk Urquhart said that the public debate on the issue of nationalisation of the mines would pose a significant challenge for South African companies with local projects as foreign investors would be wary of investing while there was no clarity on the issue.

This was of particular concern to Wits Gold as the company was aiming to raise offshore capital later this year for its De Bron gold prospect.

Wits Gold investor relations manager Hethan Hira said in an interview that the company was under way with the prefeasibility study for the De Bron prospect.

It was expected that the prefeasibility study, which was being undertaken by Turnberry Projects, would be completed by the end of this month or early next month.

Urquhart stated that an analysis of work undertaken for the scoping study so far indicated that the outcomes would be very positive.

The Wits Gold board was expected to make a decision on further progress of the project in July.

Urquhart added that it was likely that Wits Gold would take the project to bankable feasibility stage by the end of the year. However, in order to progress to bankable stage, the company would need to raise capital offshore.

Wits Gold had a secondary listing on the TSX and it was probable that the company would raise the necessary capital in Canada.

The nationalisation of the mines debate would not make the process of raising offshore capital impossible, but it would make it very difficult, said Urquhart. Thus, the debate was of concern for the Johannesburg-based junior gold miner.

It was important to understand that the South African mining sector needed FDI in order to sustain and grow the sector and that South Africa was competing with a wide range of other attractive investment destinations, he noted.