shabangu plays down proposed super tax on mine

ANY change to mining taxes would be handled carefully, with a view to keeping SA attractive to investors and creating jobs, Mineral Resources Minister Susan Shabangu said yesterday, downplaying proposals in an African National Congress (ANC)-commissioned report for a "super tax" on miners.


Susan Shabangu, Minerals and Energy minister
The Department of Mineral Resources and the Treasury are in talks about tax changes for the mining sector. The ANC study suggests the creation of a sovereign wealth fund financed by a 50% tax on miners’ "super profits".

"As the task team it is their right to come up with a proposal, but we as government believe any tax regime must make us competitive, and allow the industry to grow and attract more investment to the country," Ms Shabangu said yesterday on the sidelines of the Mining Indaba in Cape Town.

"It’s a study. You couch it and craft it in your own way and sometimes you believe in that, but that does not mean that is the view of everybody."

Peter Leon, head of African mining and energy practice at Webber Wentzel, said yesterday the proposal of a 50% tax "effectively amounts to nationalisation by stealth", by bringing about "massive" indirect state intervention in the mining sector.

SA’s regulatory framework is unpopular with investors and SA has fallen in global rankings of attractiveness for prospecting and mining. The resource rent tax mooted in the study, more than double Australia’s new 22,5% tax on coal and iron ore, is sure to deter foreign investors.

Ms Shabangu stressed yesterday that the report was just a discussion document and there was a long way to go before a position was adopted at the ANC December conference.

Senior officials in the Department of Mineral Resources said yesterday the document was just a starting point for talks with the industry, and had been "aimed high" to give the ANC room to manoeuvre and to satisfy party radicals who had called for nationalisation.

Sandile Nogxina, a former director-general of the department, said laws governing the mining sector, including the Mineral and Petroleum Development Act and the beneficiation policy recently adopted by the Cabinet, was enough to achieve the aims of the ANC study without having to make sweeping changes.

There is an existing proposal to set up a minerals commission to "regulate the granting and administration of mineral rights", giving the state a greater say in how a mining company sets up beneficiation of the minerals it extracts and how many jobs are created by imposing conditions on the awarding of rights.

The study group’s report appears to be taking the task of awarding and monitoring rights away from the department, a move that will be fiercely resisted by its staff.

http://www.businesslive.co.za/southafrica/2012/02/08/shabangu-plays-down-proposed-super-tax-on-miners