The Mineral and Petroleum Resources Royalty Bill initiated intense debate at its inception a few years ago.
However, at the Mining Indaba in Cape Town recently Minister of Minerals and Energy Buyelwa Sonjica said significant progress has been made to date in consultation with stakeholders.
“In December 2007, the draft Bill was released by our minister of finance, incorporating critical input from affected parties. Comments received to date on this draft Bill have been encouraging and we envisage that this Bill will be finalised before 2009.”
In his address to the Chamber of Mines of South Africa’s annual general meeting in November last year outgoing president Lazarus Zim confirmed the minister’s statement saying recent engagements with officials in the Treasury on proposed royalty legislation have produced some positive results for the chamber and its members.
Zim said discussions on royalties are continuing with relevant government departments and officials as the chamber continues to encourage the adoption of a fair, competitive, predictable and stable royalty regime.
Roger Baxter, chief economist at the chamber, says the proposed system addresses the realities faced by the industry. “These include the uncertain nature of commodity cycles, the need for relief during start up and marginal periods and managing cost pressures.
“Secondly, in proposing a more ‘net base’ system treasury has recognised that the royalties should not be charged on the extra value-adding activities of the mining companies but rather on the value of the mineral as close to the extraction value as possible.
“This will ensure that mining companies are not penalised for adding value in the areas of smelting, refining, sorting and so on.”
Baxter said other areas of progress include the strengthening of the fiscal stability provisions with the option for companies to enter into a binding agreement with treasury and tax relief for small-scale miners.
The chamber will present inputs to the Treasury on March 19.