Persistent fears of the forced nationalisation of mines in South Africa have jeopardised potential investment in the country, according to ratings agencies Fitch and Standard & Poors
Although the ruling African National Congress (ANC) party debated and ruled out a plan to nationalise the mining industry last week, speculations has continued within the market.
Many analysts have said that they believe the ruling was not decisive and the threat remains that South Africa could become a "pariah state" like Venezuela and Argentina, where the state has confiscated privately-owned natural resource businesses.
Any renationalisation could affect the mining giants Rio Tinto, BHP Billiton, Xstrata and Anglo American who all have operations in South Africa.
“The failure to put a nail into 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,” said Carmen Altenkirch, sovereign director at Fitch Ratings.
Standard & Poor’s managing director for South Africa, Konrad Reuss, said, “I see the continuing discussion around nationalisation as something that could be a negative outcome to confidence-sensitive investment. The ANC keeps putting the debate to rest and it keeps coming back.
“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,” added Reuss.
