Zwane's Mining Charter "indicates that the government is prioritising radical transformation even if this leads to weakening of the business climate and could reduce trend growth", Fitch said.
In its global economic outlook released at the same time, Fitch halved its forecast of SA's real GDP for 2017 to 0.6% from 1.2%, and for 2018 to 1.6% from 2.1%.
Fitch said when it downgraded SA's sovereign rating to BB+ with stable outlook, the decision reflected "our view that political events, including the cabinet reshuffle, would weaken standards of governance and public finances".
The ratings agency said in its statement: "Finance Minister Malusi Gigaba, appointed in March's reshuffle, has indicated that further fiscal consolidation measures will be forthcoming.
"However, in Fitch's view stabilising public finances remains conditional on a recovery in growth. First-quarter GDP contracted by 0.7% quarter on quarter in seasonally adjusted annualised terms, the second consecutive quarterly decline, reflecting not just structural weakness but also strong cyclical headwinds."
The new Mining Charter requires mining companies to raise their black economic empowerment (BEE) ownership to 30% from 26%, pay 1% of turnover to BEE owners before any dividends, and meet tough targets for procurement from local and black-owned companies.
"BEE is a longstanding feature of South African economic policy, but we think the new charter is the result of a more radical approach.
"Uncertainty about final outcomes, the implications on returns for existing shareholders of the new provisions, and the challenges of meeting procurement targets will continue to constrain investment in the mining sector, which accounts for about 7% of GDP.
"Mining investment has already been hit by the fall in commodity prices, relatively high costs and uncertainty about the new rules. The charter may also weaken business and investor sentiment in other sectors by raising fears of more onerous policies," Fitch said.
Business confidence in the second quarter fell to the lowest level since the financial crisis, likely weakened by political developments.
"Weaker trend GDP growth than ratings peers, partly due to a deteriorating investment climate, is a key sovereign rating weakness for SA. A further weakening in trend growth would make fiscal consolidation more difficult.
"The authorities aim to reduce the consolidated government budget deficit to 3.1% of GDP in 2017-18 from 3.4% the previous year but these targets look ambitious in the face of underperforming growth."
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