Persistent fears that South Africa could order a forced nationalisation of its huge mining industry are jeopardising vast amounts of potential investment in the country, the ratings agencies Fitch and Standard & Poor's have separately warned.
South Africa's ruling African National Congress (ANC) party debated – and ruled out – the long-mooted nationalisation of its mining industry at the party's policy conference last week.
However, many analysts believe the ruling wasn't decisive and the threat remains that South Africa could become a pariah state in the style of Venezuela and Argentina, where the state has confiscated privately-owned natural resource businesses.
UK mining giants could be first in the firing line of any move by the South African government to nationalise. UK-listed mining giants Rio Tinto, BHP Billiton, Xstrata and Anglo American all have substantial operations in South Africa.
"The failure to put a nail in 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," warned Carmen Altenkirch, sovereign director at Fitch Ratings.
Konrad Reuss, Standard & Poor's managing director for South Africa, added: "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," Mr Reuss added. Likewise, at an ANC policy conference earlier this week, business leaders that warned international confidence in the South African economy risked being damaged.
Mining accounts for nearly 60 per cent of South Africa's exports but only six per cent of the total economy of Africa's richest state.