State Diamond Trader’s contract cut, hold-back plea on ‘green energy’ tax, tax-free capex-back mining incentive

South Africa’s troubled State Diamond Trader (SDT) was awaiting guidance from the Department of Minerals and Energy (DME), at the time of going to press, on the issue of the appointment of a new CEO, as past CEO Abbey Chikane is no longer with the organisation, after his contract came to an end and was not renewed.

Read on page 6 of this edition of Mining Weekly of an SDT spokesperson’s comment that no acting CEO had been put in place, but that the business of procuring rough diamonds was continuing as usual.

The SDT was established, amid a flurry of trumpets, to buy 10% of the country’s diamond production for sale to local cutters and polishers, in an attempt to boost local beneficiation and job creation. However, the organisation is said to have fallen short of meeting its aims.

An industry workshop will be held on October 13 to identify the problems and find solutions, World Federation of Diamond Bourses president Ernest Blom tells Mining Weekly.

The South African government should hold back on the 2c/kWh environmental tax until the country has worked through the energy crisis, says Chamber of Mines economist Roger Baxter.

Read on page 10 of this edition of Mining Weekly of the Chamber, Business Unity South Africa and also labour organisation Cosatu joining forces to condemn the imposition of the “green energy” environmental tax of 2c/kWh environmental tax.

Baxter calculates that mining companies that were paying 17c/kWh to Eskom for electricity this time last year are going to be paying 50% more and suggests that the environmental tax should be held in abeyance until the current inflationary climate abates.

A letter has bee submitted to the Minister of Finance, expressing the concerns.
At the other end of the tax spectrum, one detects the Egyptian government in ultragenerous mood in dishing out mining incentives. Read on page 11 of this edition of Mining Weekly of the Egyptians not only allowing a tantalum-miner to start up in a 100% tax-free manner, but also returning the capital investment with interest.

Says tantalum-miner Gippsland: “First of all, we have no royalty, and the whole project is set up in a free-trade zone. This affords some wonderful benefits. We have no sales tax, we have no import duty and, most importantly, we have no profit tax. This regime will last for the life of the project.”

Even more generously, all capital expenditure, plus interest, is returned, and only when the project is completely debt free is the revenue shared equally with the joint venture (JV) partner, the State-owned Egyptian Mineral Resources Authority. Moreover, the Egyptian authority vended a pre-explored area into the JV, with Gippsland being responsible only for finance, technology and construction.

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