Gordhan to lead tax, royalties review: Zuma

[miningmx.com] – SOUTH African finance minister, Pravin Gordhan will this year lead a review of the country’s tax regime – a study that includes the mining sector, said Jacob Zuma, South Africa’s president.

In his annual State of the Nation speech (Sona), Zuma said that the review would decide if the current mining royalty system was appropriate in order to support the country’s public works policies.

“Ensuring that the public services we provide our people today can continue to be provided to our people tomorrow, requires that we have suitable tax policies to generate sufficient revenue to pay for these services,” said Zuma.

“From time to time, we have commissioned studies into our tax policies, to evaluate the extent to which they meet the requirements of the fiscus.

“Later this year, the minister of finance will be commissioning a study of our current tax policies, to make sure that we have an appropriate revenue base to support public spending.

“Part of this study, will evaluate the current mining royalties regime, with regard to its ability to suitably serve our people,” Zuma said.

The prospect of a tax review for the mining industry was heightened at the Investing in African Mining Indaba, a conference in Cape Town last week, when mines minister, Susan Shabangu published some of the provisions from the ANC’s national conference in Mangaung in December. A tax review was among them.

Attention will now almost certainly switch to Gordhan’s 2013 national budget speech where more details of the review may be fleshed out. Gordhan is scheduled to present the national budget on February 20.

Earlier in this speech Zuma said government had improved the clarity of South Africa’s mining policies. “We believe at a policy level we have managed to bring about certainty in mining industry. Nationalisation was laid to rest at the national conference,” Zuma said to wide applause. He was speaking in parliament.

Zuma also disclosed he had met with Anglo American chairman, Sir John Parker, two weeks ago to discuss the UK-listed group’s planned restructuring of its 79%-owned platinum subsidiary, Anglo American Platinum (Amplats).

“I said we would assist with government with the ultimate objective of saving jobs,” said Zuma without providing details of how this might be achieved.

Amplats said on January 14 that it planned to close some 400,000 ounces/year of platinum productive capacity, a restructuring that would affect up to 14,000 jobs. The announcement prompted the South African government into an angry response.

Since then, discussions with the Department of Labour on the planned restructuring has been extended to the Department of Minerals Resources, and a 60-day period of consultation, which began around January 31, has kicked off.