Chairperson, the Portfolio Committee on Finance again displayed a thorough and transparent process of deliberations and public hearings to ensure the legitimacy and credibility of the Bills submitted to this House. This is an example of good democracy and a shared responsibility to secure the best possible legislation.
These Bills have the objective to impose, arrange and administer the payment of royalties on the transfer of mineral resources in South Africa. The administration Bill aims to assure a fair and equitable distribution of payments to the people owning the land and the state as the custodian of all minerals to be extracted from the soil or beneath it.
These Bills received widespread responses from both industry and affected communities, with real concerns that varied from pure uncertainty to possible infringements on the rights on mining houses and the inherited land of communities. Some mining houses argued that, where they are already paying royalties to land-owning communities, a further royalty to the state would imply double taxation, which will obviously impact on their profitability and considerations by local and foreign mining and exploration investors. Local communities, on the other hand, wanted to assure that their vested rights to royalties are not negatively influenced by any amendment.
Vir die bepaling van die werklike gunsloon wat betaal moet word, moet daar kennis geneem word van twee tipes gunslone wat ter sprake is, afhangende of dit rou erts of onverwerkte erts of verwerkte erts is. Die formules vir die berekening van die gunslone was van die mees gedebatteerde onderwerpe tydens die openbare verhore - noodwendig omdat dit die finansile voordeel van die belangepartye die meeste geraak het.
'n Beginsel wat gevestig en ondersteun moet word is dat geaffekteerde gemeenskappe die reg verkry om die gunsloon in die vorm van aandele in die mynonderneming te verkry. Dit verseker voorspelbare sekerheid en eienaarskap in die mynmaatskappye. (Translation of Afrikaans paragraphs follows.)
[In setting the actual royalty that has to be paid, cognisance has to be taken of two types of royalties that are at issue, depending on whether it is raw, unprocessed or processed ore. The formulae for the calculation of royalties were some of the most debated subjects during the public hearings - ultimately because it impacted on the financial benefit of the interested parties the most.
A principle that must be established and supported is that affected communities are given the right to secure the royalty by way of shares in the mining enterprises. This ensures predictable certainty and ownership in the mining companies.]
In setting a royalty rate, it is vital that a balance is achieved to prevent possible investors from being deterred and existing players from looking elsewhere for more attractive business opportunities. The tax base of the royalty was agreed to be earnings before interest and tax, instead of the previous base of earnings before interest, tax, depreciation and amortisation, which did not take account of the capital investment particularly by deep-level gold mines.
To effectively deal with this complication, especially for integrated companies, of when the royalties should be applied, it was agreed that taxation should be applied as close as possible to the source in the mine. The formula takes into consideration the viability of the mine and its ability to pay the royalties. Refined formula rates would typically range from 1,7% to 2,5% depending on the profitability of the mine, with a maximum rate of 5% in cases of high profitability mines. Unrefined formula rates would range from 2,2% to 3,3% with a maximum of 7% in the case of high profitability mines.
Die DA is tevrede dat die benadering in die praktyk reeds in ander gevalle in die wreld suksesvol gebruik word en dat die gemeenskappe nie benadeel sal word nie. Met die huidige ho kommoditeitspryse sal mynhuise dit ook kan bekostig.
Dit sal nodig wees dat die uitkomste gemonitor moet word om te verseker dat onbedoelde negatiewe gevolge tydig mee gehandel kan word. Die DA steun die aanvaarding van hierdie wetsontwerp. Baie dankie. [Applous.] (Translation of Afrikaans paragraphs follows.)
[The DA is satisfied that the approach has already been successfully applied in other parts of the world and that the communities would not be negatively affected. Given the current high commodity prices, it would also be affordable to mining houses.
It is imperative that the outcomes are monitored to ensure that unintended negative results are timeously addressed. The DA supports the adoption of this Bill. Thank you very much. [Applause.]]