MINING and metals companies across the globe are facing growing demands from governments and their own employees for a share of their profits, according to a report by global consultants Ernst & Young.
The African National Congress (ANC) is not alone in demanding that miners go beyond beneficiation and share their profits directly with workers and surrounding communities.
For the first time, Ernst & Young reported in its annual report Business Risk Facing Mining and Metals, released yesterday, that resource nationalism - increased taxes, beneficiation and greater government participation - was the biggest risk companies were facing worldwide.
Abbey Chikane, Ernst & Young's director for mining, said yesterday that communities in the world's resource-rich regions were no longer looking for basic economic returns for hosting mining projects, but were rather seeking commitments that mining houses would invest in education and infrastructure, and provide job opportunities for locals.
"Through the Mineral and Petroleum Resources Development Act, SA has been a leader in articulating certain structural changes that had to be met . but enough has not yet been done," Mr Chikane said. The risk report, compiled from Ernst & Young's own analysis of the sector and sentiment surveys among business leaders, indicated that resource nationalism was the biggest deterrent to further investment in the sector.
This comes as companies are struggling with volatility in commodity prices as a result of uncertainties about demand from Europe and China.
Ernst & Young found that mining houses were scaling back investments as risk was becoming greater than the potential rewards of their operations.
Skills shortages were ranked the second-biggest risk that miners faced, especially on concerns of its effect on future production and project delays, as well as on labour costs.
The report further noted that cost inflation, a lack of infrastructure and capital, managing the execution of capital projects, the provision of licences to operate, price and currency volatility, capital management and access, and fraud and corruption posed risks for the mining sector.
The Democratic Alliance (DA) weighed in on the findings, blaming the poor sentiment on the government's proposals to play a greater role in mining.
James Lorimer, the DA's spokesman, criticised the Mineral and Petroleum Resources Development Act and the mining charter for their negative effect on the mining industry.
"These regulatory frameworks had no doubt contributed to the fact that SA's mining output in February was the lowest in 50 years, and that the industry had lost 179000 jobs between 2001 and 2011.
"When will the ruling party start to acknowledge the evidence and start picking the right options?
"When there is a policy decision to be made in the mining sector, the ANC can reliably be expected to choose the wrong option," Mr Lorimer said.
Developing countries that were also rich in resources, such as Indonesia and Brazil, were adopting a nationalism stance too, and SA was not unique, Enoch Godongwana, deputy chairman of the ANC's economic and transformation committee, said yesterday.
"Our stance is in line with those of other developing nations, in that we are asking how we are going to beneficiate these resources," he said.
Mr Godongwana said that the timing of the implementation of the nationalism policies would be "impeccable" and would take into account the current weakness of the commodities market.
He said he understood that mining houses were facing a conundrum now as they devised models that would realise maximum returns for their businesses in the future.