The mining industry has hit back at the government's plans for a Royalty Bill, which leading figures say will 'stifle investment', the South African Sunday Times has reported.

Brigitte Radebe, who is chairman of the South African Mineral Development Association (Samda), the group that represents junior miners, said that some producers would have to pay double loyalties.

Those mining companies that pay royalties to tribal communities already would be hit particularly hard by the Mineral and Petroleum Royalty Bill, she said.

She used the example of Impala, the world's second largest platinum producer, which already pays royalties to the Royal Bafokeng nation, who own the ground on which the company's Rustenberg operation is located.

The bill, she told a two-day conference on the issue, would make successful empowerment projects unviable because companies would cease to contribute to them directly, due to the costs of the state's levy.

Marius van Blerck, director of group tax at Standard Bank - one of South Africa's four top commercial banks - said the word 'royalty' had 'no place in the modern world', and was a 'medieval or pre-medieval term.'

'The major problem in South Africa right now is not about raising additional revenue, but about spending the revenue raised effectively.'

Employment was the major problem in South Africa, he said, and a revenue-based royalty would drive up costs, leaving less cash for new projects and the creation of sustainable jobs.

Both Samda and van Blerck recommend a profit-based royalty, that would reflect the actual performance of producers and not over-burden them.