South Africa Hasn’t Decided on Higher Mining Tax, Shabangu SaysMike Cohen and Franz Wild
South Africa’s mineral resources minister said the government hasn’t decided whether to raise mining taxes even as the ruling African National Congress looks for ways to secure more revenue from the industry.
“It can’t be a given” that taxes will go up, Susan Shabangu said in an interview today at the annual Investing in African Mining Indaba conference, a gathering of more than 7,500 industry executives. “We have an obligation as government to act in a responsible way. We will come up with a tax dispensation that will work for the country.”
South Africa is the world’s largest producer of platinum and chrome. Mining makes up about 9 percent of gross domestic product and accounts for two-thirds of exports.
At its national conference in December, the ANC rejected proposals to nationalize mines in favor of a tax review. The party is considering a “resource-rent” tax or higher royalties, details of which must be worked out by the government, Enoch Godongwana, head of the ANC’s economic transformation committee, said Dec. 20.
“There are no difference between the party” and the government, Shabangu said. “The party writes resolutions. As government we are there to implement. If we are unable to apply our minds and make sure that our tax regime becomes a successful and thriving regime, in allowing and attracting investment in South Africa, then the same ANC will say we have acted in an irresponsible way.”
Mining companies in Africa’s largest economy are battling to contain rising production costs after a series of strikes last year led to above-inflation wage increases. Nine platinum-mine shafts were shut in the second half of 2012, according to the Department of Mineral Resources.
Anglo Platinum Ltd., the world’s largest producer of the metal, announced plans on Jan. 15 to idle four shafts and fire as many as 14,000 workers. It put those plans on hold for two months, after Shabangu warned that the company may lose some of its mining licenses.
“We observe with concern the focus on short-term gains, which disregards the long-term prospects of sustainability,” Shabangu told the conference. “These practices are in the interests of any stakeholder, including the shareholders, as these are based on the principle of downsize and distribute, rather than retain and invest.”
The government acknowledged the short-term challenges faced by the platinum group metals industry, and was committed to working with Anglo American Platinum and other companies to address them, she said.
Platinum declined for the first time in three days, losing 0.3 percent to $1,692.74 an ounce by 9:08 a.m. in London and paring its gain this year to 9.9 percent.