South Africa mines lobby urges caution on minerals export tax

South Africa’s mines lobby urged the government to proceed cautiously with its plans to encourage more local processing of ores that may include taxing mineral exports.

Mineral Resources Minister Gwede Mantashe said last week that besides the tax, the government is looking at measures to encourage more so-called local beneficiation including incentives such as finite tax holidays or power tariffs linked to commodity prices in addition to the levy on unprocessed exports.

“The unintended consequences of export restrictions may entail lower mining production” as returns on primary extraction are eroded, Minerals Council South Africa chief executive officer Mzila Mthenjane said.

The country “urgently needs pragmatic, investor-friendly policies that will drive the reindustrialization of our economy to attract domestic and foreign investment and skills,” Mthenjane said. This involves removing constraints to beneficiation such as the power crisis that has crippled local industry.

A more than six-fold increase in electricity prices since 2008 and erratic power supply have negatively affected local processing, particularly in energy-intensive industries such as ferroalloy smelting, resulting in a withdrawal and the demise of many industries, Mthenjane said.

The Minerals Council has 70 members that represent 90% of South Africa’s production by value. Members include Anglo American Plc and Glencore Plc.

(By Ana Monteiro)