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S.Africa to review mining taxes: Zuma

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(Globalpost/GlobalPost)

South African President Jacob Zuma on Thursday said mining taxes will be reviewed in a move likely to renew uncertainty in the key sector hit by wildcat strikes and nationalisation threats.

Zuma's announcement is the first clear indication that royalties were up for review in the mining sector -- the bedrock on which Africa's wealthiest economy was built.

"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," Zuma told the opening of parliament.

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

The Chamber of Mines welcomed the announcement, with CEO Bheki Sibiya saying the chamber hoped to be invited to contribute to the study "to ensure that its outcomes are fully informed".

"The mining industry is already making significant contributions in taxes and makes further contributions through royalties on super profits," Sibiya said in the statement.

The prospect of increased taxes is likely to cause consternation in the sector after wildcat strikes last year hit profits and the country's economic growth prospects.

It will also revive uncertainty in the sector, which only in December saw an end to long-standing concerns about possible nationalisation when the ruling African National Congress rejected such a move.

But the party said the government must capture "an equitable share of mineral resources through the tax system".

South Africa is home to the world's biggest platinum mines and is Africa's top gold producer.

The mining sector generates around a fifth of GDP.

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http://www.globalpost.com/dispatch/news/afp/130214/safrica-review-mining-taxes-zuma-0