Paladin Energy
managing director
John Borshoff
 
Perth, Australia — 02 September 2013 – African governments have been urged to resist the temptation to increase taxes during times of mining downturns.

Speaking here on the sidelines of the Africa Down Under conference, Paladin Energy managing director John Borshoff said it was a no-brainer for governments to increase taxes at a time when mining company margins were under pressure, reports allAfrica.com.

Paladin Energy owns the Langer Heinrich uranium mine near Swakopmund, in Namibia.

“To us, this is a no-brainer," Borshoff said. “We understand why the temptation exists “’ to increase taxes during a mining downturn to retain revenue streams “’ but it is during these hard times with low commodity prices that miners have already cut costs where possible just to survive. We still have high fixed costs which cannot be reduced, options to defer expenditure and to optimise resources.”

Borshoff said governments and miners need to work in partnership.

“We need to learn to ride out the poor season, recognising the key benefit from a mine is from the relatively constant cost of production and the ‘revenue’ thus derived to the local economy.

“In this case, profit-based royalties can be fairer and can help preserve a mining operation during bad times and can provide higher revenue to government during good times,” he explained.

Borshoff went on to say that it needs to be understood that the window of opportunity for mine development is often short and can easily be missed.

 He warned that the climate for exploration, new developments and mine growth has changed. “It’s not summer time anymore, but hopefully it’s not winter either “’ we are, however, in a tougher season,” he continued.

“Mines are becoming marginal with lower commodity prices, and we must respond to the environment which is thrust upon us.”

Borshoff said Africa could become even more competitive on a global scale, having higher quality mineral deposits and much upside potential. He added that Paladin would continue its commitment to the African continent through good times and tough times, and be ready to expand its operations with an upturn in uranium price.

Source: allAfrica.com. For more information, click here.