South Africa’s government will “listen to all sides” before implementing any new mining taxes if the ruling African National Congress adopts them as its policy, Deputy Finance Minister Nhlanhla Nene said.
The administration will follow standard law-making steps including discussions in parliament and with business if the party adopts plans to increase taxation for mining companies at its ongoing national conference, Nene told business leaders in the central city of Bloemfontein today.
“I want to assure you that we will not be reckless,” Nene said. “This is one area we have handled with care all along.”
The ANC is under pressure to ensure South Africa’s population receives greater dividends from the world’s most productive platinum and chrome mines, Enoch Godongwana, the party’s economic policy head, said on Dec. 4. The party will call for higher mining taxes and greater state intervention in the industry at its five-yearly conference, he said.
Investec Group Ltd. Chief Executive Officer Stephen Koseff is among business leaders who have called for the ANC to send an unequivocal signal to investors about what its policy on mining and taxation will be.
“We’re not seeing a lot of private-sector investment because of a lack of policy clarity,” Koseff told the same gathering today.
Investors were rattled by a push by the ANC Youth League to nationalize mines. While the ANC must promote greater state involvement in the mining sector, the youth wing’s plans don’t have wider support in the party, Public Enterprises Minister Malusi Gigaba said in a Dec. 4 interview.
“There will certainly not be a reckless decision by the ANC as punted by the ANC Youth League,” Gigaba said.
The rand advanced 0.3 percent to 8.5935 to the dollar by 11:41 a.m. in Johannesburg.
Moody’s Investors Service and Standard & Poor’s have downgraded the nation’s debt, citing slower economic growth after the worst mining strikes since the end of apartheid and political pressure to raise spending.
Moody’s lowered South Africa’s credit rating to Baa1, the third-lowest investment-grade level, and kept it on a negative outlook on Sept. 27, saying the government was unable to “handle the current political and economic situation.” Standard & Poor’s also cut its rating by one level two weeks later, citing concern the strikes would stoke social unrest.
Nene said there was “some level of unfairness” to the downgrades, because they didn’t consider the Treasury’s mid-term budget plans announced in October.
“If you look at what’s coming out in ratings agencies’ reports, it was sort of an attempt to influence the outcome of the conference,” he said.