IT WAS another damaging blow to credibility for Government to have broken its self-imposed deadline on the much-debated Money Bill, legislation aimed at taxing the mining industry a portion of its gross revenue worth billions of rand a year to SA¿s fiscus.

SA Finance Minister Trevor Manuel was scheduled to have at least sign-posted the Money Bill in his Budget speech last week, said Minerals & Energy Minister Phumzile Mlambo-Ngcuka speaking at a mining investment conference in Cape Town last week. The word on the street is that further details will be available, possibly this week (starting 3 March).

Simon Marais, executive chairman of Allan Gray Investments, was not particularly fazed by the delay, saying: ¿Ten days is not a long time to wait for Government. Have you tried to get a passport recently?¿

But is that right? The fact of the matter is that a Government minister told an auditorium packed with investment managers and offshore investors, as well as mining company executives, that legislation affecting billions of rand would be made public.

Apart from the unwanted volatility created in equity markets, imagine the confusion it causes market watchers outside SA¿s borders. The failure to provide details on the Money Bill also undermines Government¿s ability to meet deadlines and create a climate of certainty. A major criticism of SA¿s mining-related legislation is that too much is left hanging in mid air. The failure to deliver on the Money Bill is another disappointment.

In the meantime, there¿s been considerable speculation on what the Bill might eventually contain. Market sources say that a royalty will be levied on gross revenue and that the size of the royalty will differ depending on the commodity produced. For example, the diamond industry could pay as much as a 6% royalty on revenue, followed by the platinum group metal industry which could face a 4% royalty. The gold industry may pay a yet lower amount of its gross revenue.

All in all, the royalty is likely to net Government billions of rand a year. Typically, these funds will be used to help rehabilitate communities that once were the hub of mining activities but which are now effectively ghost towns.

In addition, beneficiation will be an aspect of the Bill. Some sources in Johannesburg say that the size of the royalty can be negotiated if certain aspects of beneficiation are met by the relevant mining company. Another factor affecting the extent of the royalty is whether the mining company already complies with mineral rights royalty payments with local communities. For example, Impala Platinum paid R600m in royalty and dividend flow to the Bafokeng nation, a community in SA¿s North West Province on whose land Impala mines its metal.

Beneficiation is emerging as a key theme in Government¿s plans to transform the mining industry. In terms of the mining charter on ownership transformation in the mining industry, certain ownership transfer goals can be lowered if beneficiation can be proved.