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Mining royalty tax 'to benefit all in SA'

Feb 20 2013 20:47 Sapa

The mining industry, the bedrock upon which the country was built, is going through something like an existential crisis. (Picture: Shutterstock) (Shutterstock)

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Cape Town - Parliament's mineral resources portfolio committee chairperson Fred Gona has shut down any talk of ringfencing the royalties paid by mining houses for spending on mining communities.

Speaking during a meeting between MPs and mining houses on Wednesday about the situation in the platinum mining sector, Gona tried to gauge the industry's take on the possible adjustment of the mining royalty tax.

"Given the fact, established by the committee, that we are not sharing enough when it comes to the mineral wealth in this country... are you in principle in favour of engaging on the need for royalties to be amended?" Gona asked.

Chamber of Mines (CoM) economist Roger Baxter said he would not defend the status quo, but was looking forward to "an equitable sharing of the rents".

"We speak a lot about sharing, but don't often speak about creating and I think this is the bigger conversation. We need to talk about creating the value."

CoM senior executive Vusi Mabena said the outcry from mining communities was that they were not benefiting enough from the taxes collected in the industry.

"The challenge that the country has, in my view, is that we take that money and put it into the fiscus kitty, and it gets absorbed into all the challenges that the country is having," he said.

In 2011, the industry paid R28.5bn in tax directly, and R5.5bn in royalties.

"Is the debate not what are we going to do with the royalties... to change the negative impression to a positive impression that the money that is coming from the mining sector is indeed being used to benefit some of the communities who are crying out there for royalties?" asked Mabena.

Gona replied that the country's mineral wealth was the national heritage of all South Africans, not just mining communities.

"Once we begin to talk about ringfencing the money generated from the mining industry for the mining industry, then we are missing the point," said Gona.

He accused the mining industry of using its profits in a skewed manner.

"There's been no ploughing back of the mining industry into the development of the country per se, especially when it comes to social responsibility," he said.

A review of the tax system, including a possible amendment of mining royalties, was announced by President Jacob Zuma during his state of the nation address last week.

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