New Mining Proposals - From bad to worse
Incalculable damage has already been done to South Africa's ability to attract mining investment by the Minerals and Petroleum Resources Development Act (MPRDA) Amendment Bill. To his credit, new Minister Ngoako Ramatlhodi has recognised that the Bill is flawed and has suggested changes (see BDLive report).
However some of the changes he suggests will only make South Africa a less desirable place for mining investment.
While we applaud the Minister's realisation that the provisions of the new MPRDA Bill will kill the development of the oil and gas industry, and one of his proposed solutions is to split oil and gas from minerals, the DA is concerned with two other reported changes.
His proposal to change the way designated minerals are priced and his flirting with increased BEE ownership levels will compound an already fraught situation. Both measures will reduce the attractiveness of South Africa as a destination for mining investment, by making it more complicated and less profitable to conduct business in our economy.
The mining industry negotiated long and hard to establish the existing mine gate price. Any further reduction in that price will add more costs to companies' mining of minerals and act as a disincentive to investment and job creation.
Indeed, with unclear BEE ownership goals which are difficult to achieve successfully, increasing the required percentage of ownership will simply ensure that investors go to other countries where it is easier to do business.
The Minister's new proposals fly in the face of economic reality and we would urge the Minister to clearly commit to abandoning either measure.
Should the Minister continue with his proposed measures, the result will be reduced investment, leading to less mining, lower tax revenues and fewer jobs for the unemployed.
We cannot allow any further loses in the battered mining sector.
Statement issued by James Lorimer MP, DA Shadow Minister of Mineral Resources, June 30 2014
Click here to sign up to receive our free daily headline email newsletter
