The ball is now in your court, mining sector told

2012-12-23 10:01

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The mining sector is faced with a choice: either actively raise its contribution to the country’s developmental needs, or risk being strong-armed by the government’s resolutions on mineral policy adopted at the ANC’s elective conference in Mangaung.

The ANC this week ruled out nationalisation as a policy option, and even though the sector still faces the prospect of more taxes and export restrictions on

yet-to-be declared strategic minerals, the ruling party has said it would return the favour if the industry showed its enthusiasm towards tackling South Africa’s problems.

Apart from taxes and strategic minerals, the policies also speak to beneficiation and social upliftment. The nature and extent of additional taxes, as well as the nature of export restrictions, are yet to be decided.

“Exactly,” was how the chairman of the ANC’s economic transformation committee, Enoch Godongwana, responded when asked whether the softer stance of the policies were intended to incentivise the industry to be more proactive.

Similarly, he said the adopted policies would also give the government the ability to enforce cooperation if it was deemed insufficient.

The view was echoed by Minister of Public Enterprises Malusi Gigaba during an earlier interview which preceded the Mangaung conference.

Speaking about the prospects of levying export taxes on coal as a way to contain power generation costs, Gigaba told Miningmx he was seeking for a compromise from coal miners.

“It would be much better to arrive at a national pact than impose a decision from above,” Gigaba said. “A national pact from a reputational point of view is better and more workable.”

Frans Baleni, general secretary of the National Union of Mineworkers, said the ANC had demonstrated it was sensitive to the concerns and objectives of investors.

“It sometimes is disappointing that business leaders don’t similarly show sensitivity to what South Africa needs as a country,” he said.

He said the government could have taken the route of Zimbabwe, where at least 51% of all mining operations have to be controlled by locals, legislation which has affected South African-based Anglo American Platinum, Impala Platinum and Aquarius Platinum.

“(In Zimbabwe) They are not crying; they’re complying,” Baleni said.

Baleni said mining companies could enhance their own public image by showing their commitment to corporate and social investment, strategic beneficiation and full compliance with the mining charter.

Baleni also said the labour union was not oblivious to the needs of the mining industry to flourish, saying it would support the industry’s call for a more efficient regulatory regime – easing the required process involved in mineral right applications.

The Chamber of Mines, meanwhile, has said the ANC’s decision to rule out nationalisation would “create some certainty among investors and once again encourage investment in the country’s mining sector”.

However, it said would seek urgent detailed discussions with the ANC on strategic minerals and taxes.

“Any discussion on resource rents should take cognisance of the cyclical nature of the industry and the fact that it is very capital intensive, only delivering returns over an extended time horizon,” read a statement.

Vusi Mabena, senior executive for transformation and stakeholder relations at the Chamber of Mines, said he accepted that large sectors of society thought “mining isn’t doing enough”, even though it provides employment, directly and through related industries, to 25% of South Africa’s working population.

“It is our responsibility to put what we are doing on the national agenda,” he said.

The investment community has long viewed the elective conference as a critical event for gaining clarity about South Africa’s mining policy.

Steve Meintjes, head of mining research at Imara SP Reid, said: “It is quite symbolically important that the ANC has decided to drop the (nationalisation) word. Why it had to take three years, I’m not sure.”

He said future discussion over taxes would also be critical, and while the demand for an increase was not without merit, it was vital to levy taxes in a progressive manner, whereby the rate increases proportional to the profitability of operations.

Peter Leon, head of law firm Webber Wentzel’s Africa mining and energy projects practice, said policy certainty would only be attained once the ANC had made its intentions clear on taxes and export controls.

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