Jabu Maphalala of the South African Chamber of Mines on Wednesday told the Mail & Guardian Online that “the R1,8-billion boost”, highlighted by Finance Minister Trevor Manuel in his budget speech “is a welcomed and major relief for the mining industry”.
In his speech the minister said he would defer government’s mining royalties regime from this year to 2010, resulting in gross savings of about R1,8-billion for the industry, which could help stem the tide of job losses in the sector.
The Mineral and Petroleum Resources Royalty Act, initially scheduled to be implemented on May 1, sought to charge royalties on gross sales and has been long criticised for the adverse impact it would have on smaller mining companies in particular.
Maphalala celebrated the deferral, saying that “the mining sector has been advocating for the deferral for some time”.
When asked about the practical outcomes of Manuel’s “boost”, Maphalala said the “industry was so big it was premature to quantify at the moment”. He added that the chamber was preparing a full statement on the matter.
Manuel stated in his speech the boost was “intended to contribute to constructive dialogue between government, the mining houses and labour, resulting in practical initiatives to alleviate the impact of expected retrenchments in the sector”.
The minister’s announcement comes in the light of staggering job losses in the mining industry in recent months.
Forty percent of the job losses are confined to the platinum industry alone.
“We appreciate the minister’s focus on the future and the general mining communities,” Maphalala said.
Manuel further pointed to the establishment of an agency jointly managed by government, mining houses and labour organisations, which aims to invest in economic development in mining towns or labour-sending areas affected by retrenchments.
In recent months the price of platinum has reached lows of around $700 per ounce — a huge dive from the record high of $2 290 reported in March last year.
Maphalala said the “boost would go a long way in relieving the challenges that the mining industry faces, namely a drop in commodity prices, the increase in borrowing costs and high costs of production”.