The Democratic Alliance on Friday called for less state intervention in the mining sector, saying it should be allowed to get on with business without government interference.
DA spokesperson Ian Davidson said the proposed royalty tax on mining operations in the draft Mining Royalties Bill should be opposed.
”Besides endangering the sustainability of marginal mining operations, it will be a disincentive to both the expansion of existing enterprises as well as investment in new operations,” he said in a statement.
”It is some consolation that the government appears to be relenting on certain aspects of the draft Bill following criticism from the industry.
”However, there still needs to be far less intervention from the state in the mining sector.
”It has already had to absorb the increased costs and reduced returns as a result of the stronger rand. It needs to be allowed to get on with business without government interference,” he said.
The Bill in its initial draft proposed that mining companies would have to pay what essentially is a tax on turnover.
If enacted and implemented, the Bill would result in the closure of every marginal mine in the country, costing thousands of jobs.
It would also severely limit the start-up of new mining ventures, preventing job creation and impeding black economic empowerment in the sector.
Both these categories had a low profit-to-turnover ratio.
The mining industry remains one of the most labour-intensive sectors in the economy, and the government should be doing everything it could to encourage expansion and new investment to create jobs, Davidson said. — Sapa