Plans afoot for raw minerals export levy
THE Department of Mineral Resources would approach the Treasury about imposing a levy on all raw mineral exports from South Africa in order to encourage domestic beneficiation, the department’s director-general, Thibedi Ramontja, said on Wednesday.
Answering questions before Parliament’s portfolio committee on mineral resources, Mr Ramontja said at present the only levy imposed was on diamonds. According to the South African Revenue Service the export levy is 5% on the total value of the diamonds exported.
Mr Ramontja said the matter had become urgent. "Sooner or later our mineral resources will run out and we can’t have people saying that we never developed the vision to beneficiate our own minerals ."
Energy department officials told the committee that the Cabinet had developed and approved two value chain specific implementation plans. The first was for an energy commodities value chain that included coal and possibly gas in the future, and the second was for iron and steel.
The final implementation plan under development would have all value chains as chapters. The plan was intended to provide a comprehensive set of interventions that would create an enabling environment.
Energy department officials said in their presentation the plan was an elaboration of the beneficiation policy adopted in June last year. The emphasis would be on synergies and integration of existing beneficiation interventions in order to maximise the development effect.
Further, the plan would introduce measures to enhance local and domestic markets, and take advantage of on Wednesday’s membership of several economic trade blocs, including the Brazil, Russia, India, China, South Africa informal trade grouping.
African National Congress (ANC) MPs praised the plan, saying it was essential for the development of South Africa, and would create employment and alleviate poverty.
ANC MP and committee chairman Frederick Gona said it was important for the plan to be initiated as quickly as possible.
Another ANC MP, Christopher Gololo, said the plan was ambitious and wished the department well as it rolled it out. "We welcome it."
Inkatha Freedom Party MP Eric Lucas agreed the plan was needed. "I have been singing this song for many years that we export minerals only to import the finished goods. This is a step in the right direction."
But two Democratic Alliance MPs, Hendrick Schmidt and James Lorimer, expressed their concern about the plan. While South Africa had a comparative advantage due to its extensive reserves of raw materials, it did not have a competitive edge when compared with countries such as China. "The difference between beneficiation comparative advantage and competitive advantage is that while we have all the minerals in the world, labour productivity, electricity costs and distance from market are all issues. We have all the gold and platinum but that doesn’t lead to competitive advantage," they said.
Mr Ramontja countered that the beneficiation plan took into account that South Africa would be competing with well-established countries and that the country would have to become competitive.
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