The Minerals Council South Africa welcomed the reforms announced during Finance Minister Tito Mboweni’s medium-term budget policy statement (MTBPS) on Wednesday, adding that it stands ready to play its part in partnership with government and other stakeholders.
Mboweni said that the South African government was banking on recent reforms and policy certainty to revive the mining industry which fell by 1.7 percent in the first eight months of 2018 after production rose by 4.5 percent in the same period last year.
He said the resolution of several longstanding policy issues over the past six months was expected to support investment in mining and energy, boosted by the creation of separate oil and gas legislation.
The Minerals Council said that Mboweni tried to strike an investor-friendly tone but there was no hiding away from the fact that the fallout of the position the country finds itself in, was leading to further borrowing and higher debt level.
“Possibly the most heartening fact of the statement is that it was delivered with honesty and frankness about the depth of the economic crisis in which South Africa finds itself at this point, and with no attempt to gloss over the challenges,” it said.
“The Minerals Council appreciates President [Cyril] Ramaphosa’s efforts to implement growth-enhancing economic reforms and rebuilding investor confidence as referred to by the Minister. However, such is the enormity of the challenges ahead that the markets remain cautious.”
The Minerals Council said that particularly interesting was Mboweni’s talk about the reconfiguration of state-owned enterprises and the breaking down of walls between the public and private sectors.
“We await the detail of what this might mean. It is possible that the government is being pressed into considering the adoption of radical measures that it has previously been reluctant to adopt,” it said.
“The Minerals Council notes with interest the commitment to aligning the carbon budgeting system and the carbon tax, and the delay in implementation of the carbon tax. That is a necessary step. We look forward to seeing the detail of the changes.
Mboweni said the implementation date of the carbon tax has been postponed to 1 June 2019 from 1 January 2019 after hearing the concerns of business and labor during the parliamentary hearings. He said the carbon budgeting system and the carbon tax will be aligned. by imposing a higher tax rate as a penalty for emissions exceeding the carbon budget.