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Bribery, deception and intimidation plague mining industry

Mining minister
Susan Shabangu
Johannesburg, South Africa — MININGREVIEW.COM — 16 November 2010 – South African mining minister Susan Shabangu says bribery, deception and intimidation are plaguing the mining sector, and are denting confidence in the economically vital industry in the process.

The ministry has imposed a six-month halt on new prospecting bids from the start of September, as it overhauls mining laws, irons out irregularities in the way rights are awarded, and audits existing exploration and drilling contracts.

Shabangu said that some rights holders, especially black economic empowerment (BEE) companies, had resisted inspections at their sites, or had tried to influence officials during the audits.

“Some of the black economic empowerment partners who attend their site visits are clueless about the operations and are over-reliant on consultants “’ a clear case of fronting,” Shabangu told journalists.

South Africa is the world’s biggest producer of platinum and ferrochrome and a major gold miner. Reuters reports that while the sector’s influence on the economy has declined since the end of apartheid in 1994, it is still one of the country’s top employers.

South Africa has set a target of 26% black ownership of its mines by 2014, but the government has said that whites still dominate the industry and that changes to include more blacks were slow despite a decade of affirmative action.

“We want to make sure that when we reach those targets, they are real, and it’s not just fronting,” Shabangu added.

She said the government had audited 1 475 prospecting rights so far, while some 2 191 audits were still outstanding, and were expected to be completed by February next year. Audits so far had revealed illegal drilling, rights sold without permission, and companies with competing claims to the same plot.

Disputes over rights and transparency have added to the woes of companies already struggling with power shortages, rising power and wage costs, a strong rand and stricter safety rules.
Shabangu emphasised that while bribery and fronting were not widespread, a number of companies had failed to start prospecting as laid out in contracts.

The ministry is streamlining the rights application system, hoping to halve the processing time to three months for a prospecting license and six months for a mining right.