South Africa: Super Taxes For SA Will It Receive The Green Light?

Last Updated: 14 June 2012
Article by Edward Nathan Sonnenbergs

Most Read Contributor in South Africa, September 2016

Clarity on future changes to a tax regime for South Africa's mining industry will unravel itself later this year at the policy conference of the African National Congress (ANC). Law firm Edward Nathan Sonnenberg (ENS) director for mining Otsile Matlou explains that the possibility of a super tax – a 50% resource rent tax on super profits – will have far reaching consequences for the mining industry.

The ANC study, released earlier this year and which also acknowledges that nationalisation is not an option for South Africa, proposes on the capture of resource rents, a 50% resource rent tax on returns on investment in excess of the National Treasury long bond rate plus 7%, to be ring-fenced in a sovereign wealth fund.

Whilst the possibility of a super tax being imposed on the mining sector would benefit the national revenue authorities, it is likely to be burdensome for mining companies, Matlou says.

"Miners do expect increases in taxes, but the introduction of a new tax regime, such as a super tax, will increase the costs to miners and the benefits of doing business in South Africa," he adds.

Further, this will impact on foreign direct investment and South Africa's global competitiveness as a mining investment destination.

The Australian government this year passed a law that introduces a super tax of 30% on iron ore and coal production profits following a two year battle with the country's miners.

The Association of Mining and Exploration Companies (Amec), as the peak industry body for the vast majority of mining and exploration companies throughout Australia, and its many iron ore and coal members, who represent the bulk of the companies affected by the tax, continue to oppose the mining tax.

The industry body is not against tax reform but is opposed to this 'expensively compliant and inefficient tax'

Matlou explains that South Africa must take into consideration the fears expressed by miners in Australia,some of which also have a footprint in South Africa, such as the decreasing share of investment capital flowing through to mining and exploration projects and the increasing share of capital investment that could go offshore.

"It is necessary that the South African government considers the impact on competitiveness and investment. The current resource royalties imposed in South Africa, akin to a resource rent, are good and have been widely accepted. However, a super tax reduces investors' profits and increases the cost of doing business in South Africa.

"In Australia the super tax has been met with absolute hostility by the miners and it is key to remember that investors the world over are the same. It is also important to note that the difference between Australia and South Africa is that mining is the cornerstone of the South African economy, where more jobs are needed to create stability for the country.

"While South Africa hopes to progress on meeting its target for job creation, one must also bear in mind that investors need to be kept happy to spur on the economic growth that drives employment opportunities," he adds.

However, earlier this year, Mineral Resources Minister Susan Shabangu indicated that government would carefully consider any new tax regime and would ensure that it would not affect the county's competitiveness or impact on job creation.

Attractive Mining Destination

While South Africa is blesses with natural resources and will be a mining country for years to come, it faces competition from many mining countries, including its BRICS partners, Brazil, Russia, India and China.

The resources available in South Africa makes the country attractive to investors. The recent interest by China and the increasing interest by India is proof of this. Yet, all mining investors have multiple choice of country investment and generally investors want to invest is countries that provide maximum return, certainty of regulation, minimal bureaucratic bottlenecks and a competitive tax regime. For this reason, However it is necessary for South Africa to up its game and to remove bottlenecks to regulatory processes.

Matlou explains that the South African mineral regulatory legislation is amongst the best in the world.

"South African law is progressive, but often it is the lengthy administrative processes that hinder the country's image as an attractive and investor friendly country."

For example, attaining a mining concession can take up to five months in Zambia and up to two years in South Africa.

Further, the Mineral Petroleum Resources Development Act, changed the system of mineral regulation in South Africa from that of private ownership of mineral rights and licensing to one which is administratively driven and has replaced mineral rights with limited real rights in the form of prospecting and mining rights (for minerals) and exploration and production rights (for petroleum). 

Compared to some of South Africa's international counterparts that use a licensing system, Matlou explains that the rules of a licensing system are often clearer compared with the administrative system.

"There is too much duplication and there is a need to urgently streamline regulation. However, we must praise Minister Shabangu and her department for their commitment to improving on timelines and the implementation of regulation."

The recent Constitutional Court judgment of Maccsand has not made things better for the already administratively intense mineral regulation system.

The recent spades of Section 54 stoppages is painting South Africa in a very bad light. Although the Mine Health and Safety Act is a 'good piece of law', the challenge lies in its application.

Matlou says that "the unions believe that government is too lenient and miners believe that government is too harsh as it is bad for business and the economy." It is necessary that the manner in which the inspectorate of mines issue section 54 stoppages is reviewed carefully and discretion is carefully applied.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.