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South Africa may be considering changes to controversial mining rights legislation, under intense pressure from leading mining companies.

Among possible changes is the mooted de-linking of the issue of royalties, contained in Royalty Bill, from the Minerals and Petroleum Resources Development Act.

The issue was highlighted again recently when Gold Fields, one of South Africa’s top gold-mining companies, announced quarterly results.

If changes put to government by industry over the past few months are accepted, it would mean that government had taken on board the concerns of the mining industry which has complained that the bill was draconian, and would have a negative effect on profit and mining development in the country.

The government could be giving in to pressure from the mining sector on the Royalties Bill and indications are that the legislation may be “delinked” from the Minerals and Petroleum Resources Development Act. A treasury official has said that the timing of an announcement on the bill has yet to be decided.

Comments from Gold Field’s CEO Ian Cockerill suggest there may still be some changes to the bill.

“(They) may want to de-link the whole Royalty Bill from that legislation (the Minerals and Petroleum Resources Development Act) if and when it comes,” he says.

There has been a broad representation by the industry and Cockerill suggests this may have changed the treasury’s view. “Representation for industry made the treasury sit back and think about it. It is a political issue,” he adds.

The announcement of details of the first draft of the bill, which were made public last year and outlined a system of royalty payments based on revenue, led to an outcry from the mining industry.

Previously the industry only paid royalties if it did not own the land being mined. Instead royalties were paid to landowners and not to the state. The industry has been lobbying hard since the publication of the original draft to have royalties based on profit rather than on revenue.

Some industry commentators had expected that the details of the second draft or, at least, some comment on the bill, to be made in an up-coming budget statement.

Cockerill says it would make sense for the company to wait before converting its mining rights to new order mining rights until all new legislation involving South Africa’s mining industry were in place.

Meanwhile Cockerill also suggests the treasury’s estimates of the money it would raise through taxes from mining and other sectors could be conservative. “In my opinion the estimates (the treasury’s are may be way short of the mark,” he says.

In its medium-term budget policy statement the treasury suggested that tax revenue may be down R5bn in the year.

“We (Gold Fields) are not in a tax paying position at our local operations. I think all gold companies are in that position …,” says Gold Fields chief financial officer Nick Holland.