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Ingonyama Trust urged to apply for greater access to mining royalties

By Jonathan Erasmus

THE Ingonyama Trust Board (ITB) has been urged by national government to apply for greater access to mining royalties falling within its land ownership...

THE Ingonyama Trust Board (ITB) has been urged by national government to apply for greater access to mining royalties falling within its land ownership.

Up and until the Minerals and Petroleum Royalties Act was enforced in 2011, working in conjunction with the Minerals and Petroleum Resources Development Act (MPRDA), the trust received anywhere between R7 million to R12 million in royalties per annum, according to annual reports between 2007 and 2012.

But since the act was enforced, this collection has dropped to just R5,6 million, as mining houses paid royalties directly to the state.

Both national Treasury and the Department of Mineral Resources have told The Witness that they have urged the ITB to escalate the matter with the heads of their respective departments.

According to the Department of Mineral Resources (DMR), there are over 130 registered mining licences in KwaZulu-Natal. But while DMR spokesperson Trevor Hattingh was also unable to confirm just how many mines were on ITB land, The Witness was able to estimate, by mapping the locations of all the mines in the province, that at least a third of the mines fall within ITB jurisdiction.

“Ordinarily, only the state, as custodian of all mineral resources in the country, may collect royalties. However, the MPRDA also allows for communities that were recipients of royalties under the former Minerals Act to continue receiving such royalties if they apply for these to the Mineral Resources minister,” said Hattingh.

National Treasury spokesperson Jabulani Sikhakhane said the ITB was urged to seek political intervention.

“In the case of the Ingonyama Trust Board, the introduction of the MPRDA would have meant that some of the companies that had been paying royalties to the trust would have started paying these over to SARS. Obviously, this is not the only explanation for the ITB’s drop in income. Lower commodity prices and a decline in the profitability of mining companies would be another reason. The ITB has been advised by the DMR to apply to the ministers of Finance and Mineral Resources for an exemption [and to collect the royalties itself],” said Sikhakhane.

In the ITB’s Strategic Plan 2013-2014 presented to Parliament in April, the trust anticipated it would raise an income R60,2 million.

Judge Jerome Ngwenya, acting chairman of ITB, told Parliament in October 2012 that the trust should not have been deprived of the right to receive royalties and that if this did not change, the organisation could be further dependent on the state. The organisation was asked to comment over an extensive period of time, but failed to do so.