The South African mining industry has welcomed the national budget as a tough but necessary one that reinforces President Cyril Ramaphosa’s drive to stabilize the economy and get crucial sectors of the economy back on track.
Presenting his Budget Speech in Parliament, finance minister Malusi Gigaba welcomed the Chamber’s postponement of its court action against a contentious Mining Charter unveiled last year.
Gigaba said Ramaphosa’s intervention to restore dialogue on mining policy raised hope that a solution would be found to unlock growth and transformation in this critical sunrise sector.
He said all stakeholders should be encouraged by Ramaphosa’s intervention and commitment to set the industry on a new path of investment, inclusive growth and transformation.
In a statement, the Chamber welcomed the diagnosis on the difficult state of the mining industry and Gigaba’s reinforcement of the commitment from the president in his State of the Nation address last week to allow parties the space to engage and address the policy and regulatory uncertainty that has afflicted the industry in recent years.
“The Chamber is looking forward to working with all stakeholders including government, organised labour and representatives of mining communities in formulating a social compact that will ensure the future sustainability of the industry and will allow the mining industry to achieve its full economic and transformational potential,” it said.
“The budget speech also reinforced President Ramaphosa’s commitments to reviving the state-owned enterprises, whose decline due to poor governance and deep corruption have had serious impacts on the sustainability of the economy in general and our industry in particular.”
The Chamber also agreed that all stakeholders must work together to develop a vision of what good looks like for the mining sector and agree to a social contract which would form the necessary foundation towards reviving and building a growing, vibrant and more transformed South African mining industry.
In his budget speech, Gigaba also announced a one percent increase in the value-added tax (VAT) from 14 percent to 15 percent, the first ever adjustment to VAT since 1993, in a bid to raise R22.9 billion which would replenish the fiscus and reduce the budget deficit.
The Chamber said while the tax policy measures may be painful, government had to make a set of tough choices on fiscal policy to stabilize investment ratings in order to encourage investment going forward.
“In due course government will have to take steps to incentivise higher levels of investment through greater tax competitiveness compared with South Africa’s peers,” it added.