adminimpose higher taxes on it, warns Bheki Sibiya, chief executive of the Chamber of Mines.
The conference, which started yesterday, will finalise decisions on policies that the government will then take on board.
One of the key discussions that will be closely watched in South Africa and abroad is on a new minerals regime for the country.
While the nationalisation of the mines is highly unlikely, the party will probably adopt a proposed mineral resource rent tax of 50 percent on profits above 15 percent of “normal returns”, and greater state involvement in the sector.
“It will mean a lot of marginal mines will need to be mothballed and, in terms of job losses, the probability is that it would run into the tens of thousands,” Mr Sibiya said in an interview last week.
The mining sector, which employs about 500 000 people, lost 15 000 jobs in the third quarter after months of wildcat strikes that swept across mines.
Some strikes ended in the fourth quarter, which means that the true effect has yet to be seen.
“Our engagement with the ANC will probably be more intense after Mangaung,” Sibiya said. The mining industry, represented by the chamber, has twice this year met senior ANC leaders — shortly before the August 16 police killing of 34 striking workers at Lonmin’s Marikana Mine and again more recently.
The resource rent tax was not discussed at the meetings because positions appeared to be entrenched, Sibiya said. “The unwritten agreement was to defer talking about those issues until after the conference, because doing anything before then would be perceived as an effort by the mining industry to influence the results of Mangaung,” he said.
The chamber joins a chorus of business groupings in South Africa calling on the ANC to carefully consider its policies and its effect on the country’s image.
Confidence in South Africa’s future is falling, as evidenced by recent sovereign ratings downgrades by Standard & Poor’s and Moody’s due to regulatory uncertainty.
If the ANC’s conference delegates adopt market-unfriendly policies, further downgrades are a distinct possibility, making it more expensive for South Africa to raise debt and difficult to fund its social and infrastructure projects.
The ANC commissioned a study that resulted in the State Intervention in the Minerals Sector (Sims) document on the state’s role in the mineral sector and possible interventions. The researchers ruled out nationalisation because the government did not have the funds to achieve it and the returns would be poor.
The chamber’s submission to the Sims committee said South Africa was losing R10 billion a year in mining investment because of regulatory constraints.
Iraj Abedian, managing director of Pan African Investment and Research, said increased taxes for the mining sector were a bad idea.
“Taxes on the sector are going to be considered not because there’s any rationale for it, or because it is conducive to growth and job creation.
“It is done by default because the ANC is under pressure to be seen to be doing something,” Mr Abedian said on Thursday.
“If the government fails to deliver services and there’s dissatisfaction, it’s not a good enough reason to say the populists are unhappy (over) a lack of service delivery, so let’s increase taxes.”
The sector is under pressure from soaring costs compounded this year by above-inflation wage increases and electricity prices. — Business Day.
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