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Nene shows 'prudent fiscal stability' - Chamber

Johannesburg - The Chamber of Mines says it's encouraged by the fact that the Mining Phakisa lab, which will see the sector and the government working together intensively to resolve constraints that hinder growth in the mining sector, has been named one of the  priorities in the National Budget.

The chamber said it noted with "much encouragement" the budget presented by Minister Nhlanhla Nene on Wednesday afternoon.

It said the first budget review for Minister Nene demonstrated a "continuity in disciplined and prudent fiscal stability, which was critical for investor confidence, especially in light of the credit downgrades experienced recently."

Electricity constraints

The president of the Chamber, Mike Teke, said: "South Africa's mining sector needs to get on to the front foot not just nationally but internationally. Minister Nene highlighted the focus on the mining industry through the Project Phakisa initiative in the budget.

"This demonstrates the significance of the mining sector to the effective implementation of the National Development Plan.”

The GDP outlook, which was revised lower to 2% for 2015, highlighted the need to ensure the electricity constraints were appropriately resolved, the statement said.

While the mining sector continued to take part in large-scale electricity demand reduction programmes, the increased expense to the sector from the higher electricity levy would result in further cost pressures.

Although the diesel refund system and electricity tariff incentive increase were welcomed, they were not likely to off-set the levy increase sufficiently. 

The chamber continues to emphasise the need for collaboration with the private sector, through IPPs, (Invoice Processing Platform) to bring an urgent and sustainable solution to electricity supply growth that is needed. The funding burden and risk of further fiscal pressures are reduced through private participation, the report says.

Implementation of carbon tax

 The recognition of the weakening commodity prices pointed to further risk of decreased revenues for the budget.

The statement says it should be noted that the mining industry too is grappling with, in some instances, significantly reduced revenue outlook. In light of this, the chamber remains opposed to the implementation of carbon tax.

The industry notes the increase to the DMR (department of mineral resources) budget on mineral policy and promotion, specifically the R2.7bn allocation to promote investment in mining and petroleum beneficiation projects.

The chamber says Minister Nene has aptly placed the need for the country to “intensify efforts to address economic constraints; improve our growth performance; create work opportunities and broaden economic participation.”



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