The two things that markets and investors depend on are statutory certainty and political stability. The mining industry is still a vital part of our economy, and the farce concerning mining rights could constitute a comic opera if its consequences were not so serious.

The Mineral and Petroleum Resources Development Act of 2002 had the noble objectives of making provision for equitable access to, and sustainable development of, the nation’s resources. It also revolutionised our mining rights, vesting the State, as opposed to private property owners, with custodianship of South Africa’s resources.

Despite the noble objectives, the implementation of the Act has had what at best can be described as “unintended consequences”. At worst it reeks of nepotism and rampant corruption. The consequence of this is that Canada’s Fraser Institute, a research group with a strong focus on mining, recently ranked South Africa only just above the Democratic Republic of Congo and Zimbabwe in terms of ease of mining exploration and investment in Africa – hardly the salubrious company we aspire to keep! This sends a very damaging message to investors, which will think twice before committing additional funds to this country, particularly when there are so many attractive mining opportunities in other parts of the world.

Mercifully, Mineral Resources Minister Susan Shabangu grasped the “stinging nettle” in an effort to do badly needed damage control. She implemented a six-month moratorium on all new prospecting applications from September 1, 2010, and instituted a comprehensive audit of all such rights granted since 2004, when the Act was implemented. It is to be hoped that this period will also be used to review the legislation, bearing in mind the original objectives and aspirations. Sadly, this has come too late to undo the damage that has been done to the investment cause of the country, but it should go a long way towards improving the perceptions of investors.

Without going into the gory details, the two high-profile cases that propelled this issue into the full scrutiny of the international spotlight are the fiasco involving Kumba Iron Ore (an Anglo American associate company) and Arcelor Mittal, and the almost inexplicable loss by Lonmin of the right to mine and sell metals that are a by-product of its platinum mining operations. Add the constant calls by the African National Congress Youth League for the nationalisation of the mines, and one can easily understand the trepidation of investors and the market.

Juxtapose the apparent enrichment of a handful with the very successful strategy of Royal Bafokeng Holdings (RBH), which manages and develops the commercial assets of the Royal Bafokeng Nation. RBH’s overall business objective is to maximise investment returns and facilitate the delivery of sustainable benefits to the community it serves. RBH seems to be the shining example of broad-based black economic empowerment and transformation.

RBH believes that the heart of the empowerment challenge is enhancing human dignity within a relatively poor rural community through long-term socio-economic development. As such, work and significant investment is expended on education, health, sport and recreation, and technology, with a strong emphasis on economic development. The strategy is aimed at creating a financially independent community, bearing in mind the inevitable fact that mineral resources have a finite life span and will run out over the next 30 years or so.

RBH has a significant stake in Impala Platinum, the mine that operates in the traditional heartland of the Bafokeng people around Rustenburg. Its investments in other listed companies include Merafe, SA Coal Mining Holdings, Vodacom, Astrapak, Metair and Zurich Insurance.

The time has come for concerted action to ensure that our rainbow nation is empowered by harnessing the mining and economic muscle to ensure that all citizens are put in a position to help to grow the economy and to receive the education, housing, health care and security that will propel us into an era of the post-mining economy.

Our efforts must be redoubled and, fortunately, foreign investors are not averse to sharing resources for growth and development of communities on a sustainable basis. They can clearly see the benefits to themselves, partly in enhanced earnings and results that will arise from a prosperous and secure nation.

What they do not like is uncertainty, insecurity of tenure, political insurrection, and schizophrenic government policy and decision-making.

* David Sylvester is the chairman of the Shareholders’ Association, telephone 021 686 7567.

* This article was first published in the 4th quarter 2010 edition of Personal Finance magazine.