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Anglo American Warns Against SA Mining Tax Increase

by Robert Lee,, London

11 June 2012

In a speech to the inaugural mining summit, Anglo American’s chief executive officer Cynthia Carroll has expressed strong opposition to any suggestion that taxation on South Africa’s mining sector should be increased.

She made her comments following the publication by the majority party, the African National Congress, of a policy document on the role of the state in the mining sector, and in which it recommends additional taxes to, as it says, ensure the state benefits more from mining company profits.

Carroll opposed South African mining regulatory and tax changes, asking the government to be careful in the policy choices it makes in the short-term as the results could be profound on future investments in the mining sector. She said that all proposals should be measured against whether they would create an internationally-competitive investment climate for mining.

As mining companies make large capital investments with payback over the long-term, she added that they need to be able to trust in regulatory and fiscal policy stability and predictability. If they fear arbitrary and unpredictable changes, she said, they would not invest.

In that respect, Carroll pointed to the proposal for a new resource rent tax in the ANC policy document, to address what it sees as a too low tax return to the government from the mining industry.

She noted, however, that the current system of royalties, together with the corporate taxes paid by mining companies, already ensures that the state receives a fair return, and any change could threaten that South Africa could become globally uncompetitive for mining investments.

Finally, Carroll was also critical of any suggestion to restrict or tax mineral exports in order to stimulate the development of domestic processing industries. She considered that South Africa has sufficient mineral resources to increase exports as well as providing the raw materials for which there is a real domestic demand, and that exports are, in fact, necessary to provide the funding for economic development.

TAGS: South Africa | tax | business | mining | export duty | royalties | corporation tax | Africa

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