Cape Town, South Africa. South Africa’s Mineral Resources Minister Susan Shabangu said she sees no need for a major overhaul of the country’s mining tax regime, as the ruling party contemplates changes to the current system.
“Our current tax system” is “competitive and it is working well,” Shabangu told reporters in Cape Town today. “It’s very important to us to continue to create certainty and stability in the mining industry. There is always an opportunity for improvement.”
A study commissioned by the ruling African National Congress in 2010 proposed the introduction of a “resources rent tax” on all mining operations triggered once they are generating returns exceeding about 15 percent annually. Other recommendations included a 50 percent capital-gains tax on the transfer of mineral prospecting rights and a 30 percent “mineral foreign shareholding withholding tax” on companies based in foreign tax havens.
South Africa is the world’s biggest producer of platinum, chrome and manganese. Anglo American, Xstrata, Rio Tinto Group and BHP Billiton have operations in the country. The ANC’s youth wing has called for the nationalization of mines and banks, saying the country’s black majority has an inadequate stake in Africa’s largest economy.
ANC branches are discussing the proposals, which will be considered at a party conference next month.
“One aspect that gives comfort is the endorsement of the current process that we have implemented,” Shabangu said. “One does not see major steering away from that particular process.”
The government participates in the mining industry through the African Exploration Mining & Finance, Shabangu said. The state company will soon announce plans for a project in the eastern Mpumalanga province that will supply coal to power utility Eskom Holdings and create 1,000 jobs, she said.
South Africa’s Mineral and Petroleum Resources Development, which was adopted in 2002 and vested custodianship of all mineral rights in the state’s hands, is being reviewed and will be presented to the Cabinet by the end of July, Shabangu said.
The planned changes will ensure the law adequately addresses environmental considerations and is aligned with environmental and water laws and the government’s plans to encourage mineral processing, she said.
Shabangu urged mining companies, including Anglo American and AngloGold Ashanti, which are being sued by former workers who contracted lung diseases while working underground, to reach an out-of-court settlement.
More than 700 former mineworkers suffering from silicosis and other illnesses have filed a lawsuit against Anglo American in Britain courts, while lawyers have signed up more than 6,000 people to join a separate class-action lawsuit against gold- mining companies in South Africa. The companies have denied liability, saying they complied with the law.
“We hope the mining companies can still go that route of engaging the workers,” Shabangu said. “We are engaging the mining industry. The mining industry has not moved toward making sure that proper compensation happens.”