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South Africa to introduce "resource tax" on mining companies

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South African Minister of Mineral Resources Susan Shabangu on Tuesday said the government would introduce a "resource tax" on mining companies so as to better compete with other major mining countries. "We've got to compete with Australia and Canada. So if there are any taxes which must be implemented we must be mindful," the minister told delegates attending the Investing in African Mining Indaba conference, which kicked off on Monday and will run until Thursday in Cape Town.

The government has been mulling over a proposal put forward by the ruling African National Congress (ANC) to impose resource tax instead of nationalizing mines.

But Shabangu did not say how the government would enforce the tax regime.

She said her ministry would review the proposal "on a regular basis."

"They (taxes) are not static because they've got to respond to global challenges, but also they have got to respond to the needs of a country."

Shabangu assured that the government was committed to making South Africa a "destination of choice" for mining companies, including those in the platinum industry.

"We are looking at how best do we ensure as partners of government, labor, and the companies, what are the mechanisms that will mitigate the challenges faced by the mining industry."

She said the government was ready to work with mining companies so as to build a mining industry that "is resurgent, resilient and is able to function successfully to its full realizable potential. "

She was speaking amid rising tension between the government and certain major mining companies accused by the government of disrespecting the regulatory framework.

Last month, the Anglo American Platinum (Amplats), the world's top platinum producer, announced plans to lay off 14,000 workers as part of its restructuring maneuver, a move that has irritated the government.

But Sabangu said she was confident such tension would be defused through dialogues.

"I am happy and satisfied that we are talking to Amplats, and it is going to yield positive results," Shabangu told reporters after opening the conference which is bringing together thousands of representatives from the mining sector and the government.

"We understand the pain faced by the platinum sector; we are part of it as government, as a country, and we need to find lasting solutions among ourselves.

"It is not their problem, it is our problem as a whole, as a country, and we have to share that problem in finding a common solution in that."

She urged mining companies to continue respecting the regulatory framework instead of neglecting the government when making important decisions. Endi