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.
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Abbey Chikane, Ernst & Young’s director for mining, said 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.
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