Super tax on mines less likely – AngloGold
04 July 2012
Posted by: SAIT Technical
By Bloomberg/Dineo Faku (Business Report)
South Africa's appetite for additional mine taxes might have diminished after last week's ANC policy conference, AngloGold Ashanti chief executive Mark Cutifani said yesterday.
"It appears as though the appetite for a resource rent has dropped away,” he told a conference in Johannesburg.
"A resource rent tax at 50 percent of profit would wipe out those dividends” the industry generated, "and if you think we had an investment problem in the last three years, a resource rent tax would create a serious problem”.
A committee commissioned by the ANC to study nationalisation and other state interventions in the minerals sector proposed the windfall tax and said nationalisation would not be viable. The ANC Youth League had called for mines to be nationalised, saying it would create more jobs in the country.
Enoch Godongwana, the head of the ANC's economic transformation committee, said on Friday that the party had not finalised discussion on what instruments to use to extract more revenue from mining companies.
"We have agreed that there is a need for a tax instrument, but we have not yet taken a final decision,” he said yesterday.
The ANC had also not yet decided on plans for strategic minerals because they were dynamic and changed depending on the needs of the country. "For example five years ago uranium was not a strategic mineral, but it has since become one, now that South Africa is embarking on a nuclear programme.”
Abiel Mngomezulu, a non-executive director of state-owned African Exploration Mining and Finance, told the conference that nationalisation was not "off the table”. It would remain there "until we solve the issues of the communities”.
The state should classify "revenue generators” including gold, platinum and diamonds, as strategic minerals, as well as ferrous commodities and energy minerals, he said.
Cutifani said AngloGold was not averse in principle to classifying strategic minerals that supplied a competitive advantage. But threats to tenure remained a concern.