ANALYSTS WARN BHP & RIO TINTO OF RISKS FROM SA NATIONALISATION.

MELBOURNE, Aug 1 Asia Pulse - Analysts have warned of BHP Billiton (ASX:BHP) and Rio Tinto's increased political risk profile amid details of a radical South African plan suggesting the part nationalisation of the country's mining assets.

Documents leaked in South Africa last week revealed the Mbeki government was considering a proposal giving black investors as much as 51 per cent of all new mining products within a decade.

Black-owned businesses must also control at least 30 per cent of existing projects before permission is given for expansion.

The South African government said it would step in when mining companies are unable to find a suitable Black Economic Empowerment partner by warehousing shares in projects with state-owned development institutions.

News of the bill has since sparked a sell-off in global resource stocks with assets in South Africa, including BHP Billiton, Rio Tinto and London-listed Anglo American.

Analysts have downplayed the prospect of such laws being introduced to their full extent, but warned South African assets will remain under a cloud until the issue is settled.

"While an outcome of this nature does not seem plausible as it would deter future investment in South Africa, it clearly remains one to watch," UBS Warburg director of resources research Glyn Lawcock said.