ANC said to decide on minerals export taxes
South Africa’s ruling African National Congress (ANC) decided to introduce measures including export taxes in the next five years to encourage companies to use raw local materials for domestic manufacturing, according to a person with knowledge of the matter.
The party’s National Executive Committee, its top decision- making body, decided at a June 5 to 7 meeting to implement previously adopted ideas within the current administration’s term, said the person, who didn’t want to be identified because the details of ANC meetings are private.
The ANC told Department of Mineral Resources and Department of Trade and Industry officials to assess which minerals may be classified as “strategic” before considering how to ensure they can be harnessed to support economic growth, said Enoch Godongwana, the head of the party’s Economic Transformation Committee.
“Regulation is a last resort,” Godongwana said by phone on Monday from Johannesburg, South Africa’s commercial capital. “There is no overall consensus on taking such measures.”
Since winning May 7 elections, the ANC has pledged to enact more “radical” economic transformation as it seeks to appease growing disgruntlement over the 25.2% unemployment rate. The party hopes that enforcing the use of minerals the nation has in abundance in local manufacturing will give it a competitive advantage over other countries.
Platinum reserves South Africa has the world’s biggest platinum, chrome, vanadium and manganese reserves and is Africa’s largest coal and gold producer. The ANC said in December 2012 that it would impose measures such as export restrictions to ensure local users have a guaranteed supply of iron ore, coal, copper, zinc and nickel.
South Africa’s mining industry, which makes more than 5% of gross domestic product and accounts for two-thirds of exports, was hit by a five-month platinum-industry strike that ended last week. The country’s mineral wealth is worth an estimated $3.3-trillion, according to the Department of Mineral Resources. The rand gained 0.1% to 10.62 per dollar by 9.02am in Johannesburg.
At its meeting the ANC also decided to remove regulatory barriers to investment in energy projects as it seeks to end power shortages in Africa’s second-biggest economy, the person said. The ANC wants the government to make energy supply its top priority, the person said.
Since the meeting Mines Minister Ngoako Ramatlhodi said he asked President Jacob Zuma to hold off on signing into law proposed changes to the Mineral and Petroleum Resources Development Act.
These include giving the state the right to a free 20% stake in all new energy ventures and to change how projects are awarded, threatening to stymie investment in oil and gas exploration.
The ANC decided to take steps against poor lending practices and excessive charges by banks, according to the person. The South African Reserve Bank has warned of the danger of a growth in unsecured lending, which can turn into bad debt. – Bloomberg