The the Julius Malema-led ANC Youth League is on a push to nationalise key resources, across South Africa strikes have turned violent.

The beret-donning Malema attended his disciplinary hearing this week wearing a T-shirt that proclaimed “Economic Freedom Fighters”.

Miners in the country face a difficult future and the implosion of South African mining may result in a push higher in Gold and Platinum Prices.

South Africa is the world’s biggest producer of platinum, and one of the leading producers of gold, diamonds, base metals and coal.

South Africa holds the world’s largest natural reserves of gold, platinum-group metals, chrome ore and manganese ore, and the second-largest reserves of zirconium, vanadium and titanium.

The sector spans the full spectrum of the five major mineral categories – namely precious metals and minerals, energy minerals, non-ferrous metals and minerals, ferrous minerals, and industrial minerals.

The ANC committee investigating the role of the state is understood to have beneficiation and export taxes included in its remit.

Another issue related to taxing windfall profits is that they can be short term, a workable solution being to put the proceeds in a sovereign fund so that the benefits are spread over a longer period than that of the windfall itself.

The export tax, writes Feddersen, could be combined with the Australian government’s watered-down RRT.

Australian Prime Minister Julia Gillard is under pressure from the Australian Greens to raise the RRT, which is intended to bring in A$4-billion a year. A study by the Greens shows that Gillard’s version of RRT would bring in a $38-billion, a $115-billion less revenue over nine years than what was proposed by former prime minister Kevin Rudd.

“This would be a perverse outcome at a time when the mining industry is already putting a huge strain on the rest of the economy,” said Green Party leader Bob Brown.

Mining giant BHP Billiton this week reported a record profit of $23.9-billion on revenue of $71-billion and taxes of $7-billion.

“This week, BHP Billiton declared a record profit three days after BlueScope Steel announced it was abandoning its export business, closing steelworks and laying off 1000 workers,” the Sydney Morning Herald said in an editorial.

“A resources rent tax, properly drafted and implemented, would be one way to address this issue. We have argued that a tax on mining rents is entirely justifiable. Its proceeds, which would be substantial, might be invested in a version of the future fund to ensure Australia can benefit from the proceeds of mining after the present boom has subsided.”

BHP Billiton does not break its financial results down by country, so it is not possible to determine how profitable its South African operations are. It is a beneficiary of subsidised electricity prices at its South African smelters. Media24 recently won a court application to compel BHP Billiton to disclose the value of this contract. The company has said it will appeal the decision.

The ANC’s report on the role of the state in resource management will be completed by November, when it will hold its national executive committee meeting and will be up for adoption at next year’s policy conference at Mangaung.

Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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Posted by Shayne Heffernan on Sep 2nd, 2011and filed underGold, Latest News, Market News, Metals, Platium, USA.You can follow any responses to this entry through theRSS 2.0You can leave a response by filling following comment form or trackback to this entry from your site