Commodity markets, metal prices, boost Sars’ tax collection

Economists have attributed the surge in mining profits – which contributed largely to the more than R38 billion in taxes in the past financial year by the SA Receiver of Revenue (Sars) – to the strong performance of many commodity markets and a hike in the price of metals.

Sars has reported collecting R1.25 trillion – beating February’s estimate, revised upwards from the Treasury’s gloomy prediction in October.

Minerals Council chief economist Henk Langenhoven said the outbreak of the Covid-19 pandemic posed “a particularly challenging year, not only for the mining industry, but for South Africa and the world”.

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“The industry managed to sustain itself through the pandemic, somewhat better than anticipated at the beginning of the nationwide lockdown in March, and was able to continue to make a meaningful contribution to the economy and the lives of South Africans.

“Mining gross domestic product declined in nominal terms by nearly 4% in 2020, to a value of R373 billion. “The lockdown resulted in an estimated inflation-adjusted contraction of between 10% and 13%,” said Langenhoven.

“When comparing the response to the Covid-19 pandemic with that of the 2008 global financial crisis, the crisis impact was not as deep as Covid-19, with the period to recovery significantly shorter at almost two years,” he said.

Despite challenges faced during 2020, Langenhoven said the mining industry:

• Contributed R373 billion to gross national product;
• Employed 453 091 people;
• Paid employees R148.5 billion, contributing R26.2 billion to pay-as-you-earn on behalf of employees;
• Paid R34.7 billion in value-added taxes and R11.8 billion in royalties; v Sold R608 billion in primary mineral sales; and
• Exported R575.1 billion in sales.

This year would require “immense efforts from all industry stakeholders – business, employees and government in particular – if a recovery of the magnitude needed is to materialise”.

While iron ore performed excellently, platinum group metals, which included rhodium and palladium, “have done very well”, according to economist Mike Schussler.

“Gold prices have remained relatively high and coal prices have not been too shabby.

“The SA commodity price index has been on an eight or nine-year high in US dollar terms.

“That translates into a lot more turnover for the mining industry, which has helped in the payment of taxes and mining royalties.

“If oil prices get going again, which they did once or twice before, by falling back, that would be inflation for us,” said Schussler.

Said Sibanye-Stillwater senior vice-president of investor relations James Wellsted: “The early start of the mining industry after the first Covid-19 lockdown and the successful return to normal operational levels – coupled with high commodity prices in the second half of the year – meant that the tax receipts that the government received were more than a R100 billion higher.

“Mining has a crucial role to play in the economy and still has a crucial role.

“As we said at our results, we invested R6.3 billion in new projects and there is a lot of potential investment that can come from the mining industry that would reboot this economy.”

Anglo American Platinum spokeswoman Jana Marais said: “Despite the tough economic climate, we have benefitted from high prices for the platinum group metals we mine, driving a strong financial performance.

“As a result, we paid R10.4 billion in taxes in 2020.

“In addition, we invested R500 million into Covid-19 prevention and support measures, also paying R1.6 billion to staff who were unable to come to work due to lockdown restrictions.

“We also transferred 1.4 million shares to community development trusts – continuing to invest in and support our employees and communities during these trying times.”

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