There is no nationalisation, there will be a form of tax
Enoch Godongwana, the head of the ANC’s economic transformation committee, takes Sabelo Ndlangisa through the Mangaung conference’s resolutions on ‘increased state-ownership in strategic sectors’ that have replaced the ‘strategic nationalisation’ of mines and mineral resources.
» Can nationalisation be applied retrospectively, or only for new projects?
There’s no nationalisation. Just state participation in the strategic sectors of the economy where deemed appropriate on the balance of evidence.
» So can that involvement apply retrospectively?
My sense is that it is not cast in stone because if you look at the mining sector, for instance, we are talking about (intervening) through the resources, through rent and equity.
There’s nothing that can stop us from buying into existing projects or buying a new one.
It is going to depend on opportunities. We are going to operate like any other entity that is out there in the market.
» Does this mean where you buy equity the private sector will remain in control, or would the state take operational management?
It would depend from project to project. Where we go for minority stakes it might no be operational.
» So the state will take over where it has the majority stake?
Not necessarily. I’m saying it will depend from project to project and on the partners as well.
» When it comes to taxation of minerals, will it be a resource rent tax or tax on superprofits? (The latter is preferred by the industry as it implies you only pay when you are making extraordinary profits. The former is measured against factors like revenue or commodity prices, not profitability.)
We haven’t defined the tax system we are going to use.
We’ve taken a principled view that we might have to capture the rent as the state through the tax system.
» Cabinet approved the Mineral and Petroleum Resources Development Amendment Bill two weeks ago. Will the new proposals be incorporated into the bill?
» Why not?
They need fine-tuning, we (still) need to debate and discuss. We are discussing
with the mining industry, we are discussing with everybody.
» Is there a time frame for implementing the resolutions, then?
No. We need to drill down on them a bit. We may have to do some detailed work on them, and see what we can do.
» But aren’t you worried that the conference has merely exacerbated market jitters instead of providing certainty on these issues?
No. The policy is clear; no conference decides on modalities. Conferences take resolutions on broad policy parameters. I’m not worried at all. The market will just say: ‘(They) have taken away the N (nationalisation)-word, but they are still going to tax us.’
There’ll be that kind of a mixed reaction.