CAPE TOWN (miningweekly.com) – The introduction of a flow-through share scheme of the kind adopted in Canada should be reconsidered in South Africa to boost junior mining, South African Mining Development Association (Samda) president Bridgette Radebe said on Wednesday.
Radebe told the IHS McCloskey South African Coal Exports Conference that South Africa should persist with the flow-though concept despite the failure of previous attempts because of its alleged complexity.
Canadian mineral exploration companies issue the flow-through shares and pass the tax breaks for exploration on to investors.
“We believe as Samda that we need to look at flow-through shares,” said Radebe, who is also executive officer of Mmakau Mining.
“Look at Canada and see how the flow-through shares have benefited the junior mining companies,” she said, adding that the flow-through tax rebates stimulate investment.
Flow-though shares were on the point of being introduced in South Africa when former Finance Minister Trevor Manuel, in his last Budget, dismissed them as being too administratively complex.
The scheme he introduced in its place, which he said would be better, has been an abject failure, with not a single known taker.
“We still believe that there is room to relook at the flow-through shares scenario,” Radebe said.
She gave a firm thumbs down to super taxes and described South Africa’s current tax legislation as being well defined tax legislation, with mining companies taxed at the normal rate of 28% and gold having its own progressive tax option.
She indentified Impala Platinum, African Rainbow Minerals, Assore and Royal Bafokeng Platinum as the only four truly South African mining companies listed on the JSE.
There were also too many encumbered black economically empowered (BEE) JSE-listed companies that were really owned by banks as a result of over-indebtedness.
“People go around claiming that they own mines but when you look at the ownership portfolio and the funding agreements, the ownership does not really vest in the hands of the BEE,” she claimed, adding that the road to transformation remained challenged.