Most Read Contributor in South Africa, September 2016
SA's policy choices will profoundly impact the
mining industry and the country as a whole.
JOHANNESBURG (Mineweb) - CEO of Anglo American, Cynthia Carroll,
has said that South Africa's policy choices over the coming
weeks will profoundly impact not only the future of the mining
industry but also the country.
"Those choices must be made wisely. We are at a crossroads.
There is a clear path that will lead to prosperity and there are
blind alleys that we must avoid" Carroll said to delegates at
the Mining Lekgotla gala dinner last night.
Carroll has been clear in her opposition to one of these
"blind alleys", nationalisation, on many occasions, along
with its promise of a "miracle cure for all ills" said
With voices waning on the nationalisation issue, Carroll moved
on to address the ANC's State Intervention in Mining Sector
report (SIMS) where proposals were put forward for a mineral
resource rent tax.
"It [the SIMS report] argues that the proposed new tax is
necessary to ensure that the state benefits appropriately from the
profits the mining industry earns. Yet the existing royalty regime
was introduced for exactly this purpose. Combined with the existing
system of taxation, it already ensures a fair distribution of the
benefits of mining" said Carroll.
Ernie Lai King, an executive in tax at Edward Nathan Sonnenbergs
raised similar concerns around the SIMS tax proposals during the
"I can't think of one solitary example of an industry
growing by the imposition of more taxes" said King.
"In my humble opinion, government should rather address the
reasons why the sector is in decline and reverse the downward trend
- then you will in any event get more tax. Government is looking in
the wrong direction; they should remove obstacles to promote
foreign direct investment and growth" said King.
Calling for stability and predictability in policy making,
Carroll also said that South Africa's policies must take
account of the reality of global competition.
"The SIMS report sometimes loses sight of this fact.
Similarly, elements of the report are based on a false dichotomy
between mining for export and mining for the domestic
With the country estimated to have the world's largest
minerals endowment with resources worth an estimated $2.5 trillion
dollars, the CEO was of the opinion that these could support both
growing exports and local demand.
"Restrictions or taxes on exports would simply harm the
mining industry without contributing to broader economic
development" said Carroll.
In a similar vein, Carroll supported the local beneficiation
strategy outlined by government but only as long as it made
"It is vital that the benefits of mining should help to
create a broad-based and robust economy beyond mining itself. But
this can only be done by allowing the market to focus on sectors in
which South Africa has a genuine competitive advantage".
The call for policy stability and predictability was not a lone
cry; it was heard many times over the two day lekgotla.
Carroll explained the rationale: "mining companies make
huge capital investments for the long term. They simply will not
make those investments if there is a fear of arbitrary and
unpredictable regulatory change".
Referring to the upcoming ANC Policy Conference, Carroll said
that the timing of the Mining Lekgotla could not have been better
in order to bring stakeholders together in order to consult on the
future of the industry.
Originally published in Moneyweb, 07 June 2012
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