The mining industry, the bedrock upon which the country was built, is going through something like an existential crisis. (Picture: Shutterstock) ~ Shutterstock
Cape Town - Finance Minister Pravin Gordhan stressed on Wednesday that mining is a cornerstone of the South African economy, and refused to comment on the rumoured increase in mining taxes.
He said the devastating impact of disruptions in the mining sector last year on the country's deficit showed it was imperative mining operations ran smoothly, and acknowledged industry concerns about shifting demand, rising power prices and "licencing issues".
In a highlighted text box in the budget review document, the minister said mining needs a supportive policy climate and a stable regulatory framework.
Speaking to journalists at parliament, he dismissed suggestions that this was at odds with recent remarks by government leaders - ranging from Mineral Resources Minister Susan Shabangu to President Jacob Zuma - that have set the industry bracing for higher mining royalty taxes.
"Nothing that does not appear in this box is relevant today. That is the short and simple answer, and we reiterate as you did that mining is a very important part of our economy," he told a media briefing.
"It employs hundreds of thousands of people, mineral exports are almost 50% of our exports and, as you can see, they impact our current account deficit if the exports go awry.
"But we also understand that mining today faces a new structural environment... because the demand patterns have changed around the world."
Gordhan said mining houses and other roleplayers had to take into account these changes, alongside the labour unrest that led to the Marikana shooting last August.
Shaft closures and prolonged labour unrest could constrain both output and the general economy.
Gordhan stressed that strife in the mining industry has directly contributed to a bigger deficit, estimated to be 5.2% of gross domestic product in 2012/13, because it resulted in a revenue shortfall of R16.3bn.
"The key is that we need to get miners to start mining, and ensuring that they make their fair contribution to the economy and to all aspects of the economy."
Gordhan confirmed that the review of South Africa's tax regime, which was announced by Zuma in his state of the nation address this month, would include mining taxes.
"We will look at both the issue of taxation in the mining industry and other relevant tax issues that impact upon growth, employment and development in South Africa and inform us and guide us."
The minister announced that the tax review committee would be headed by Judge Dennis Davis. He said its terms of reference and other members would be announced in due course.