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Finstone litigation could be settled
David McKay
Posted: Tue, 19 Jun 2007

[miningmx.com] -- THE visit next month to South Africa of a high-level Italian trade delegation, led by the country’s deputy prime minister, Gianfranco Fini, could be troubled by expropriation claims lodged against the South African government by Italian granite firms Red Graniti and Marlin.

This was after it emerged on February 15 that the companies, controlled by Luxembourg-based firm Finstone, lodged expropriation of its mineral rights. They were reacting to mining legislation promulgated in 2004 in which equity and prospecting rights had to be sold to blacks or returned to the South African government.

Finstone’s contention is that the Minerals and Petroleum Resources Development Act law breaches bi-laterial agreements between South Africa and Italy ensuring protection of investments. The trade delegation, however, is interested in investing in South African infrastructure projects and doubtless has an eye on the potential for World Cup 2010 opportunities.

The delegation justly believes sueing the government with whom you desire business is hardly leaving the perfect calling card. The potential for embarrassment is not lost on the South African government either. And while there’s interest from both sides to somehow resolve the matter ahead of the visit, both are waiting for the other to move first.

Said Sandile Nogxina, minerals and energy director-general: “I suspect the matter will be raised before the visit of the delegation. But it’s up to them. They have taken this formal step of taking us to arbitration.”

The view from Livio Zucchini, chairman of Red Graniti, was equally welcoming of an answer. “We would be very happy to find a solution. We’ve tried to organise discussions at the highest level.

"But to be honest with you, we haven’t heard anything yet,” he said.

Apparently, the granite companies have spent the last two years negotiating with the South African government.

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A source close to the matter said there’s already been some activity with initial discussions having already taken place between the Italian companies and the South African government. “This is the biggest delegation to come to South Africa. They’ll be about 250 people in total converging between July 10-12,” the source said. “But the sticking point seems to be the bilateral agreements.”

They’ll be little change from the South African government should Finstone elect to litigate, as Anglo American has come to realise. It announced in April it would not litigate claims of expropriation against the government in the wake of the mining law preferring instead to negotiate. Said Nogxina: “We will not be intimidated. We’ll take this to the highest international court if need be. It’s the South African people we are protecting here.”