Johannesburg, South Africa — MININGREVIEW.COM — 04 June 2008 – The South African Chamber of Mines has welcomed the release of the fourth and final draft of the Mineral and Petroleum Resources Royalty Bill, and its associated Royalty Administration Bill, which are scheduled to become law in May of next year.
A Chamber statement released here yesterday said the fourth draft represented the culmination of some five years of research and engagement. Given the specific characteristics of mining (such as the long lead times to develop projects) and the importance of the mining sector as a large employer (495 577 employees in 2007), as well as its significant export earnings (33% of merchandise exports directly in 2007), it was vital that the new royalty system capture the key issues of stability, predictability and competitiveness, it added. The Chamber believed that the fourth draft went some way towards reflecting these important issues.
The fourth draft Royalty Bill recognised the cyclical nature of the mining sector, whereby government and the mining companies shared in the bear and bull markets through a formula based system, the statement continued, but at the same time provided a minimum rate for the extraction of a non-renewable resource.
Under the new calculation, the Treasury said in a statement that it would cap the rate charged for refined minerals, oil and gas at 5% and for unrefined minerals at 7%. “The revised royalty regime is investor friendly, and should be relatively easy to comply with and easy to administer, while it should also ensure that the fiscus receives its fair share of tax revenue," it added.
The National Treasury has requested final input on the draft bill by 11 June, and has stated that the final document will be submitted for consideration by Parliament on 24 June 2008. The Chamber will be preparing further input for Treasury on this important matter.