Infrastructure key in Gordhan's budget

André Janse van Vuuren | Wed, 22 Feb 2012 18:19

[miningmx.com] -- FINANCE Minister Pravin Gordhan has given Mintek and the Council for Geoscience a shot in the arm to bolster their capabilities, but the main theme of the budget was continued spending on infrastructure.

National Treasury’s income estimates also showed the fiscus would receive an estimated R5.5bn in mining royalties during the current financial year, up from R3.5bn in 2010/11, and would increase to R8.6bn by 2015.

Speaking in parliament on Wednesday, Gordhan said Government’s approved and budgeted infrastructure plans amounted to R845bn over the medium-term expenditure framework period (up to 2015).

According to the Budget Review 2012 document, R3.2 trillion worth of large-scale projects are currently under consideration or in progress, of which energy and transport-related activities respectively represent R1.945 trillion and R583bn.

Of this total, about a quarter are being financed and implemented, and the remaining three-quarters are under assessment.

“Not all of the R3.2 trillion of infrastructure projects under consideration will be approved for implementation,” read the document. “Government will choose the most cost-effective projects that provide optimal long-term benefits.”

The budget follows President Jacob Zuma’s State of the Nation address two weeks ago, where he said Transnet would spend R200bn on rail over the next seven years. This was to link coal mines in Limpopo province to existing transport infrastructure and power stations, as well as the upgrade of the iron ore and manganese lines.

The Department of Mineral Resources has been granted a budget of R1.1bn for the 2013 financial year, which would increase to R1.36bn by 2015.

It includes a R200m allocation earmarked specifically for the upgrade of laboratory equipment and facilities at the Council for Geoscience. Together with Mintek, the two institutions would receive R350m “as part of [an] economic support and competitiveness package”.

The council’s main source of income comes from fees for geological service contracts and transfers from the department.

Mintek’s spending focus over the medium term would be on research in water treatment and the rehabilitation of derelict and ownerless mines, as well as spending on projects that include a rare earth pilot plant, a metal atomising plant and semi- precious gemstones in the Northern Cape.

STATE DIAMOND TRADER

The medium-term focus of the State Diamond Trader is to continue to purchase up to 10% of unpolished diamonds from local producers and selling these to diamond processors.

“The entity is seeking regulatory amendments on the mandate to ensure that the entity trades profitability, and is accelerating the development and acquisition of appropriate human resource capacity, as it is currently operating with seconded employees.”

The Trader expects its number of approved clients to increase from the current 102 to 150 by 2015. Diamond-production inspections are expected to increase from 25 in the coming year to 30 by 2015.

CARBON TAX

Gordhan said a revised policy paper on a carbon tax would be published later this year for a second round of public comment and consultation. In an initial draft, Treasury suggested taxes ranging from R75/tonne of carbon dioxide emitted to R200/tonne, depending on the severity.