Two top rating agencies have warned that a revival of the heated debate on nationalisation of mines at last week's African National Congress (ANC) policy conference is "concerning" and is likely to affect investor confidence in SA.
All three main global agencies - Fitch, Moody's and Standard & Poor's (S&P) - have given their credit ratings for South Africa a negative outlook, which means the next move could be a downgrade.
That would raise the cost of borrowing for both South Africa and state-owned entities, and erode investor appetite for local assets.
"The ANC's recent policy conference was deeply concerning and very disappointing," said Carmen Altenkirch, sovereign director at Fitch Ratings.
"The failure to put a nail in the coffin of nationalisation and agree on a way forward for the mining sector will continue to harm a sector that has already suffered from a lack of policy clarity."
South Africa's mining sector contracted by nearly 17% in the first quarter, hit by a prolonged strike at Impala Platinum as well as soaring costs for electricity and labour.
Platinum mines have recently been shut down and miners have generally been troubled by uncertainty over mooted state intervention in the sector.
A report, commissioned by the ANC and discussed at the conference, proposed a 50% resource rent tax on mining "super profits", increased regulation, and price and export controls for minerals seen as "strategic".
No consensus was reached and the contentious topic of nationalisation resurfaced with a vengeance, despite repeated assurances from the government that it was not being considered.
"I see the continuing discussion around nationalisation as something that could be a negative outcome to confidence-sensitive investment," said S&P's MD for South Africa and southern Africa, Konrad Reuss. "The ANC keeps putting the debate to rest and it keeps coming back."
In the end the conference rejected outright nationalisation but fierce support for the idea from the ANC Youth League and other party factions means it is likely to come up again. Policy decisions will be taken only at the ANC's elective conference in Mangaung in December.
"My worry now is that the lack of detail and lack of commitments from the conference mean that the general policy debate will be transferred to Mangaung," Nomura economist Peter Attard Montalto said. "That means potential for a risk event in December is higher - with the succession debate carrying on at the same time, politics will intermingle much more aggressively with economic policy."
President Jacob Zuma's leadership will be challenged at the Mangaung conference, which will decide who will fill all of the ANC's top posts.
Ms Altenkirch said it was a pity that political infighting dominated last week's talks, at a time when decisive leadership was needed to place South Africa on a higher growth path and reduce unemployment.
Another issue of contention at the conference was an official youth wage subsidy, which appeared to have been scrapped in favour of a proposed job seeker's grant for young people.
Analysts say this policy could simply create a new welfare payment, rather than the type of job opportunities which would help to reduce South Africa's youth unemployment rate of 50%. That could ultimately make it difficult for the Treasury to achieve its aim of keeping spending in check and reducing the official budget deficit to 3% of gross domestic product over the next few years.
"From our perspective, South Africa doesn't have the luxury of going through any policy experiments or adventures . there is no room to manoeuvre from a credit rating perspective," Mr Reuss said.
He said S&P would take a "wait and see" view over the next few months, until the debate translated into actual policies.
S&P and Fitch have both given South Africa a BBB+ investment grade rating, while Moody's rating is one notch higher at A3.
When Moody's put a negative outlook on its rating in November, it said populist pressure and strains within the ANC could undermine commitment to low budget deficits and debt targets.
S&P gave South Africa's rating a negative outlook in March, warning that there was scope for a downgrade if economic and social problems fed into the political debate.