The South African government’s Minerals and Petroleum Resources Development Bill would see black-controlled businesses own 51% of all new mines in the country within 10 years, an arrangement Anglo American says is “unacceptable.”
“Aspects of the draft charter are not feasible and are unacceptable,” the company states in a release.
The bill achieves its power through the employment equity act, legislation designed to distribute the country’s wealth to all its citizens, 75% of whom are black. At present, South African businesses are owned mostly by whites, who comprise 14% of the population.
The government has already passed legislation that will see blacks owning 25% of the petroleum chemical industry within 10 years, and it’s thought the same will happen in the country’s financial services sector.
Critics of the bill are urging the government to reduce the quota to 25% from 51%.
Economists warn that onerous empowerment legislation would damage the country’s chances of achieving its growth targets and could deter foreign investment.
On the day after the bill was released, shares in Anglo American dove 11% on the Financial Times Index (FTSE) in London and a further 8% on the Johannesburg Stock Exchange (JSE). Meanwhile, Harmony Gold lost 16% on the JSE, and Durban Roodepoort Deep fell 18%.
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