Feb. 2 (Bloomberg) -- A study into mine nationalization commissioned by South Africa’s ruling African National Congress proposes introducing measures including a 50 percent resource- rent tax rather than taking over operations, a party official who has seen the document said.
Previous ANC discussion documents have defined resource rent taxes as a levy that would be triggered once the expected rate of return had been attained on an asset. Nationalizing the country’s mine assets would be too expensive for the government as it would cost more than 1 trillion rand ($131 billion), according to the study, the official, who declined to be identified because the document hasn’t been made public, said.
The study also proposes a 50 percent capital gains tax on the sale of mineral rights before mining has begun to discourage speculators and suggested moving mine assets held by the government’s Industrial Development Corp. into a state mining company, the official said.
The party instituted the study after its youth wing leader, Julius Malema, proposed that the government take over the country’s mines and banks because the black majority isn’t deriving enough benefit from them.
South Africa is the world’s biggest producer of platinum, chrome and manganese and supplies coal to power plants in Europe and India. In April 2010 Citigroup Inc. valued the country’s mineral resources at $2.5 trillion, the most of any nation.
If adopted by ANC leaders the study will influence policy documents to be discussed at a policy conference in June. Final decisions on economic policy will be made at its national conference in December.
Keith Khoza, a party spokesman, didn’t immediately respond to a message left on his his mobile phone by Bloomberg. Earlier today he confirmed that the ANC has received the report and said its decision-making body could discuss it at a 5-day meeting that began today.
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