Zwane dividend spooks mines
The new Mining Charter measure ‘makes the future bleak’
Mining analysts say in the short term most mining companies would be able to pay the 1% turnover dividend required by the new Mining Charter, but in the longer term, it would have devastating effects on the sustainability of the industry. Andries Rossouw, PwC’s mining assurance partner, said on Tuesday the 1% represents a huge cost to the industry. "In the short term, the majority of mining companies would be able to pass the solvency and liquidity tests required before any distributions can be made but longer term it will have a substantial effect on investment." The solvency test, which requires a company’s fairly valued assets to exceed its liabilities, will be straightforward. "The bigger issue is on the liquidity test," said Rossouw. There were additional concerns due to the uncertainty of the implementation of the charter. "Will the 1% distribution to BEE [black economic empowerment] shareholders be tax deductible, or will it be treated like a special dividend and not be deduc...
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