Minerals Council: The ANC’s Framework For The Revival Of The Economy
The Minerals Council South Africa acknowledges the release last week of the ANC’s Economic Transformation Committee’s Reconstruction, Growth and Transformation document and is pleased to note the approaches proposed to reinvigorate the county’s mining industry.
The Minerals Council supports the economic revival approach published last week by Business for SA, which has a number of recommendations missing from the ANC document. However, the Minerals Council is pleased that it acknowledges the falling levels of investment in exploration, to which the Minerals Council has consistently drawn attention, and the job losses the industry has faced in recent years. A consequence of the dearth of exploration spending is that fewer new jobs are created to replace those which are lost.
Despite this, the document reaffirms that South Africa remains “a global mining powerhouse”.
In outlining the interventions required to translate the industry’s comparative advantage into a competitive advantage, the ETC suggests that regulatory disputes and uncertainties be resolved with immediate effect. The Minerals Council agrees that regulatory certainty is imperative if South Africa is going to attract investment in the industry.
We also welcome the increased focus on innovation and junior mining, both of which are key to extending the country’s mineral legacy. We are particularly pleased by the ETC’s suggestion that listings of mining companies on the JSE be encouraged and South African retail investors willing to invest in mining exploration should be incentivised as is the case in other mining jurisdictions.
This is a significant proposition which will give junior mining companies a fighting chance when competing for investor funds. The junior mining sector is a key to further growth and employment in the industry, yet the ability to develop new projects has become exceedingly difficult with hundreds of companies trying to access a shrinking pool of funding and investment opportunities.
South African junior mining companies, through the Minerals Council Junior and Emerging Miner’s Desk, have been lobbying for the introduction of tax incentives or concessions for exploration. What we would like to see is the introduction of tax incentives or capital gains tax advantages for investment in exploration. We would also encourage the government to support the establishment of an exploration fund. Exploration incentive schemes implemented in other successful mining jurisdictions like Canada have boosted those countries’ mining investment ranking.
For too long, South Africa has lost out to new investment in mineral exploration because we don’t have the financial incentives designed to unlock investment and kick-start exploration.
We look forward to seeing concrete proposals and to a booming junior sector in the near future.