The Chamber of Mines (CoM) has lauded Finance Minister Nhlanhla Nene’s Budget speech last week, stating that it prioritised the Mining Phakisa Lab, aimed at healthier cooperation between government and the mining industry to address the challenge that hinder the growth of the mining sector.

“The South African mining sector needs to get on the front foot, not just nationally, but internationally. “[The Minister’s] Budget review highlighted the focus on the mining industry through the project Phakisa initiative. “This demonstrates the significance of the mining sector to the effective implementation of the National Development Plan (NDP),” CoM president Mike Teke said.

The chamber also stated that the Budget speech demonstrated continuity in disciplined and prudent fiscal stability, which was critical for investor confidence, particularly in light of recent credit downgrades.

Further, it added that the industry noted the increase to the Department of Mineral Resources’ budget on Mineral Policy and Promotion, specifically the R2.7-billion allocation to promote investment in mining and petroleum beneficiation projects.

“Minister Nene has aptly [stressed] the need for the country to intensify efforts to address economic constraints, improve our growth performance, create work opportunities and broaden economic participation.

”This further confirms government’s commitment to the implementation of the NDP as the blueprint to achieve its objectives to the benefit of all South Africans,” the chamber said.

The CoM noted that the gross domestic product (GDP) outlook, having been revised lower – to 2% – for 2015, highlighted the need to ensure that electricity constraints were appropriately resolved, as this significantly impacted on the mining industry.

“While the mining sector continues to participate in large-scale electricity demand reduction programmes, the increased expense to the sector from the higher electricity levy will result in further cost pressures,” it noted.

Further, the chamber welcomed the diesel refund system and electricity tariff incentive increase, but noted that it was not likely to sufficiently offset the levy increase. The chamber continued to emphasise the need for collaboration with the private sector through independent power producers to bring an urgent and sustainable solution to the necessary electricity supply growth.

The CoM reiterated its opposition to the carbon tax, set for implementation in 2016, noting that the “mining industry too is grappling with, in some instances, significantly reduced revenue outlook”.