An investigation of the potential impact of the new South African Mineral and Petroleum Resources Royalty Act
Year: 2011
Type: article
Abstract: After a five-year process of consultation and intense debate, which included the release of four Draft Royalty Bills, the Mineral and Petroleum Resources Royalty Act was finally promulgated in November 2008 (MPRRA, 2008). The main purpose of the Royalty Act is to collect mining royalties from South African mines holding mining rights granted in terms of the Mineral and Petroleum Resources Development Act (MPRDA, 2004). The intention is to compensate the State for its custodianship over South Africa’s nonrenewable mineral resources when these are exploited by mining companies for their own benefit. The main features of the royalty regime are first, that one of two formulae is used to calculate the rate of payment; second, this choice of formula requires an assessment on refinement; and third, both formulae are payable on a base of gross sales. The Royalty Act makes provision for the royalty rate to fluctuate with mine profitability as expressed by EBIT1 and the degree of refinement. The nature of the sliding-scale system of royalties as applied to a base of gross mineral sales was discussed by Cawood (2010). The rates for refined and unrefined minerals are calculated using the following formulae: Refined rate (Yr) = 0.5 + [EBIT/(Aggregate gross sales x 12.5)] x 100
Author: F.T. Cawood
Institution: University of the Witwatersrand
Language: English
Subfield: Management, Monitoring, Policy and Law
Field: Environmental Science
Domain: Physical Sciences
Open Access status: diamond
OpenAlex ID: W2138497093