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South Africa's mineral royalty revenues may decline, Finance Minister warns

South Africa's mineral royalty revenues may decline, Finance Minister warns

South Africa's mineral royalty revenues may decline in the long term as resources are depleted, the country's finance minister said on Thursday.
"It should be noted that mineral royalties revenues will tend to be cyclical, especially given the commodity price cycle and such revenues may decline over the long-term as a result of the gradual depletion of our mineral resources," Finance Minister Trevor Manuel told parliament.
Manuel was speaking during a debate on the Mineral and Petroleum Resources Royalty Bill, which mining companies fear will lead to double taxation and hit output in South Africa's key mining sector, making the industry less competitive.
The mining bill would see mining companies continue to pay royalties to traditional communities where they operate, as well as paying royalties to the state.
"The (bill) protects the rights of certain communities to continue to receive community royalties. These community royalties will not be allowed as an offset against royalty payments to the state. Contrary to the views of many mining companies and analysts, such payments to communities are not viewed as double royalty," Manuel said.
South Africa's Treasury released a third draft of the bill in December, which cut tax for gold and platinum and gave incentives for local processing of minerals.
Unlike previous drafts, the new proposals would allow mining companies to exclude smelting, refining, transport and other costs, before the royalty is calculated according to a formula that factors in the commodity cycle and marginal mines.