Johannesburg - The National Union of Mineworkers (NUM) this week condemned the move by Italian and Luxembourg companies to sue the South African government for the expropriation of its mineral rights.
Italian investors in Marlin Holdings and Marlin Corporation as well as Red Graniti have brought the case against the government.
Marlin is a privately held part of the Luxembourg-based Finstone group, while Red is a subsidiary of Red Graniti of Italy.
The groups are seeking losses and damages totalling e266 million (R2.6 billion). The companies combined South African operations employ about 2 000 people.
The European investors are being represented by Webber Wentzel Bowens mining lawyer Peter Leon.
Leon has stated that the new minerals law was in breach of 42 international investment treaties that South Africa has signed.
In terms of the Minerals and Petroleum Resources Development Act, which became effective in May 2004, the ownership of mineral rights in South Africa has changed from being held by private interests to vesting in the hands of the state.
The litigants argued that the bilateral investment treaties entitled them to "prompt, adequate and effective" compensation for the expropriation of their South African investments and that they must receive "fair and equitable" treatment by the South African government.
The firms have been granted a request for compulsory international arbitration against the South African government by the World Bank's International Centre for Settlement of Investment Disputes in Washington.
The two companies are alleging that the South African government's mining law is in violation of the bilateral treaties signed between South Africa, Luxembourg and Italy.
The claimants said that the new mining law effectively led to expropriation of their mineral rights without providing sufficient compensation in terms of the protection contained in the bilateral investment agreements.
NUM said it was concerned about the implications of the legal action for South Africa and the government.
The companies were looking to "cajole" the government into conceding a special dispensation for the company, the union added.
"An attempt to invoke emotions of discrimination and that to the discrimination suffered by those referred to as historically disadvantaged individuals is silly and must be condemned with the contempt it deserves," the union said.
The new mining law was part of redressing the national grievance caused by apartheid, NUM said.
"In our view, the government has been very sympathetic and understanding to the interest of capital both nationally and internationally," the union said.
The new mining law, including the mining charter, was formulated to redress the imbalances created in the mining industry by apartheid. The law suit could milk dry the public coffers of funds that the state needed for development, NUM said.
"The allegation of expropriation and the claim for compensation could set an international precedent with unmitigated financial disaster for the South African state," NUM said.
"The fact that the claimants invested in South Africa after the demise of apartheid and therefore did not benefit from the historical injustice perpetuated against the indigenous people is not sufficient argument to seek exoneration from contributing to redress of the national grievance and development of the country," NUM said.
In a statement in March, Webber Wentzel Bowens said the two companies had sought since December 2004 to reach an amicable settlement with the South African government.
Webber Wentzel Bowens added that over an 18-month period there had been extensive correspondence and numerous meetings with the government as well as the involvement of the Italian and Belgian governments.