JOHANNESBURG - International rating agency Moody’s yesterday said that the draft of the mining charter published this month would require a few iterations before an agreement was reached.

The agency said that it projected economic growth to average 1.6percent this year and 2.1percent next year.

“Our forecast is based on further progress on the government’s reform agenda through the year, particularly negotiations over the mining charter, with a view to a final agreement by the end of the year, and further progress in improving state-owned-enterprises governance and overall public finance governance,” Moody’s said.

The Department of Mineral Resources and the mining industry are set to lock horns next month at the mining summit over the draft charter. The Minerals Council South Africa has already laid down the marker for the department, expressing its unhappiness over several clauses in the charter.

The council said it was surprised by some clauses in the charter that were not agreed to by the Charter Task Team.

These include the proposal to top up existing right holders' BEE ownership to 30percent within five years and that a mining rights holder would be compelled to pay a trickle dividend equal to 1percent of earnings before interest, tax, depreciation and amortisation to communities and labour.

Citadel chief economist Maarten Ackerman said there were positive and negative aspects to the new proposed mining charter.

“All in all, I think the new charter is an improvement, compared to the previous version. It is moving in the right direction but, with those challenges, it will still be quite difficult to support the industry, especially new mining projects,” Ackerman said.

Moody’s also flagged land reform, particularly the prospect of land expropriation without compensation as another key issue whose resolution would likely affect investment.

“Cyril Ramaphosa has stated his intentions to implement it without harming the economy, but uncertainty over how this will be achieved continues to limit near-term investment.”

Moody’s, which remains the last of the three big credit rating agencies to rate South Africa’s investment grade, reviews the country again in October.

- BUSINESS REPORT