http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.29Change: -0.09
R/$ = 11.70Change: -0.05
Au 1207.85 $/ozChange: 1.57
Pt 1174.50 $/ozChange: -1.50
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Jul 03, 2012

Proposed ANC mines policy ‘wrong approach’ to meet 'laudable goals' – Anglo

Back
Johannesburg|London|SECURITY|Africa|Anglo American Thermal Coal|CoAL|Eskom|Industrial|Mining|Platinum|Projects|Resources|Security|Systems|Africa|South Africa|USD|Security|Energy|Equipment|Less Energy Security|Less Mining|Manufacturing|Products|Security|Services|Solutions|Steel|Systems|Infrastructure|Iron Ore|Iron-ore|Power|Security|Fuel Cells|Nascent Steel Mill Technologies
SECURITY|Africa|CoAL|Eskom|Industrial|Mining|Platinum|Projects|Resources|Security|Systems|Africa|||Security|Energy|Equipment|Manufacturing|Products|Security|Services|Solutions|Steel|Systems|Infrastructure|Iron Ore|Iron-ore|Power|Security|
johannesburg|london|security|africa-company|anglo-american-thermal-coal|coal|eskom|industrial|mining|platinum|projects|resources|security-company|systems-company|africa|south-africa|usd|security-facility|energy|equipment|less-energy-security|less-mining|manufacturing|products|security-industry-term|services|solutions|steel|systems|infrastructure|iron-ore|iron-ore-person|power|security-person|fuel-cells|nascent-steel-mill-technologies
© Reuse this



JOHANNESBURG (miningweekly.com) – Mining group Anglo American says the State Intervention in the Minerals Sector (Sims) report, which was commissioned by the African National Congress (ANC) in 2010 following strong calls for mine nationalisation, relies “fundamentally on the wrong approach to achieve some laudable goals” and would harm investment prospects.

In a 70-page response to the Sims document – the themes of which were broadly accepted by ANC delegates at a party policy conference in late June, but which are still to be debated and adapted ahead of the ANC's upcoming National Conference in December – Anglo welcomes the rejection of blanket nationalisation.

However, it also argues that the Sims proposals, if adopted, will harm the industry without securing the envisaged benefits.

Sims is premised on capturing a greater share of the ‘rents’ associated with mining in the interests of the country’s growth, development and employment objectives.

On the fiscal front, it proposes a 50% resource rent tax, targeting earnings achieved over and above that which would have been possible through the ‘normal’ application of capital, labour and innovation.

A consolidation of the ‘knowledge linkage’ to develop the human resources and technological capacity required to maximise mining’s spinoffs are also proposed, along with ‘backward linkages’ (which relate to the upscaled development of indigenous capital goods, services and consumables sectors associated with mining), as well as the ‘forward’, or beneficiation, linkages. The proposal is also keen to foster spatial linkages that encourage the creation of infrastructure that offers ‘life beyond the mine’ and opens up regional integration opportunities.

HARMFUL EFFECTS

But Anglo submits that a number of the proposals would be harmful to the mining industry and would undermine investment in the sector.

“The imposition on private miners of mandatory supply arrangements, regulated price caps, higher taxes, export taxes, export restrictions and local content quotas will reduce competitiveness and increase uncertainty,” the London- and Johannesburg-listed miner avers.

“Less investment means less mining; less mining means fewer minerals, less revenues for the State, less jobs in supply industries, less energy security, and paradoxically, higher prices of minerals for downstream industries,” it cautions.

Anglo also strongly opposes what it describes as the pursuance of a “coercive” industrial policy, underpinned by the institution of constraints on the sale of ‘strategic’ commodities, such as iron-ore, coal and platinum. Sims proposes the insertion of pricing and supply conditions into the licensing of mines producing such strategic minerals so as to guarantee a cost-plus, or export parity pricing (EPP), domestic sales arrangement.

POSSIBLE RISKS

Anglo says a 10% blanket discount to EPP would compromise the viability of about 90% of its planned iron-ore expansion projects in South Africa, while forcing noncompetitive platinum beneficiation would be counter-productive.

Any move to curtail coal exports, meanwhile, could threaten domestic supply, as there would be little incentive to invest. The report notes that about $400-million of Anglo American Thermal Coal’s yearly profits of around $500-million are derived from exports.

The focus should instead be on “a growing mining industry”, Anglo states. “Anglo American, thus, respectfully requests that the ANC proceed with caution . . . Any gains from the Sims approach must be netted against the damage to the mining industry,” it warns.

The response also describes as “incorrect” the assumption that much of the value from private mining is lost to South Africa. It quotes a 2008 report, commissioned by Anglo, which shows that between 71% and 89% of the value from minerals mined by the group is captured within South Africa.

The miner’s “alternative path” is premised on policies that would focus on the growth of the mining industry and the simultaneous expansion of value-add and upstream manufacturing. “We believe there is no conflict between expanding mining production for export and simultaneously channelling mining feedstocks for local beneficiation, while also expanding other linkages from mining to the rest of the economy.”

WORLD LEADER

Such a policy intervention would be premised on turning South Africa “into the number-one mining country in the world” by incentivising investment and growth in the mining industry – in other words, avoiding policies that might persuade miners to favour other mining jurisdictions over South Africa.

“Anglo American’s favoured route is to grow mining in order to grow the rest of the economy, and not to grow the rest of the economy at mining’s expense.”

To achieve the objective, South Africa should deal with its policy uncertainty, regulatory inefficiencies and infrastructure bottlenecks, as well as its skills deficiencies.

However, the miner adds that it is willing to enter into partnerships with government and others to explore linkages to other parts of the economy, including minerals beneficiation where a sound “business case” exists.

It would also support research and development initiatives to develop fuel cells and other platinum-group-metals-linked technologies, as well as “nascent steel mill technologies”.

Leveraging its procurement systems in support of the expansion of the domestic capital equipment sector is also highlighted, as is Anglo’s in-principle support for a sovereign wealth fund.

The miner is also prepared to support the State mining company in the context of a “level playing field” and assist in finding solutions to the country’s prevailing power shortages.

Anglo also commits itself to cooperating with Eskom to “safeguard national power security” and ensuring that “multigrade products from new coal mines are spilt between Eskom and the export market”.

The report concludes by calling for a “structured dialogue”, while emphasising Anglo’s commitment to finding solutions that “sensibly harness the power of the mining sector for maximum benefit of the nation”.
 

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Economy News
Finance Minister Nhlanhla Nene
While the new tax introductions and hiked levies outlined in Finance Minister Nhlanhla Nene’s inaugural budget speech this week were likely to hit consumers hard, it was deemed the most efficient option for government to narrow its fiscal gap without hurting South...
African entrepreneurs under the age of 22 have until April 15 to submit applications for the fifth Anzisha Prize, which aims to identify Africa’s most exciting young social and business entrepreneurs.
Foreign direct investment in South Africa this year is likely to scale down as a result of dampened investment appetite, exacerbated by a lack of policy certainty, South African-Germany Chamber of Commerce (SAGCC) CE Matthias Boddenberg told Engineering News Online....
More
 
 
Latest News
Salani Sithole
International consulting engineering company Royal HaskoningDHV (RHDHV) has appointed Salani Sithole as South African MD, effective March 1. Sithole has been with the company for six years and, prior to joining RHDHV, held various positions in engineering consulting,...
The Gauteng Provincial Government has outlined plans to develop a handful of “mega” human settlements as part of an ambitious long-term housing development strategy aimed at narrowing the housing backlog, with plans afoot to replace informal settlements with...
Eskom power stations
While State-owned power utility Eskom was unable to cut off electricity supply to some of its neighbouring trade partners, it was able to reduce energy exports by 10% when load shedding was implemented locally. The Department of Public Enterprise explained that Eskom...
More
 
 
Recent Research Reports
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
 
 
 
 
 
This Week's Magazine
National flag carrier South African Airways (SAA) is in an advanced stage of renegotiating its deal with European airliner manufacturer Airbus to acquire A320 single-aisle (or narrow body) aircraft. The aim is to replace ten of the aircraft still on order with five...
Worldwide, the main thrust in the ports industry over the past decade or more has been to increase efficiency. Traditionally, ports have been run by engineers and mariners and, in the past, increasing a port’s capacity was achieved by expanding the harbour. “That has...
What do you do when an elephant has a toothache? You call Dr Gerhard Steenkamp from the University of Pretoria’s (UP’s) faculty of veterinary science, Onderstepoort, one of only two elephant ‘dentists’ in the world.
The 2015 Sanlam/Business Partners Entrepreneur of the Year (EOY) competition was launched earlier this month in Johannesburg, with the main focus on creating and inspiring entrepreneurs to create jobs and boost the economy.
In a recent letter to the editor that I sent to Engineering News (Concerns regarding South African portion of Square Kilometre Array) and in a follow-up article elaborating further (We must start preparations to build our own synchrotron light source), I stated my...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96