By Althea Soobyah, partner, head of Tax at Forvis Mazars in South Africa
The mining industry in South Africa has consistently been a cornerstone of the nation’s economy, demonstrating robust revenue generation over the past five years. According to reports from the SARS, the sector has shown impressive financial performance, contributing significantly to the country’s coffers. This article delves into the revenue statistics, the tax incentives for the 2025/2026 financial year, and the recent recognition from the President regarding the mining industry’s pivotal role.
Althea Soobyah partner, head of Tax at Forvis Mazars South Africa. Supplied by Forvis Mazars
Presidential recognition and the call for regulatory reform
In a recent address, President Cyril Ramaphosa, acknowledged the mining industry’s status as one of the largest contributors to national revenue. Highlighting the sector’s vital role, the President proposed that the regulatory framework governing the industry would be looked at, specifically targeting the reduction of red tape. This proposal aims to streamline operations, reduce bureaucratic delays, and foster a more conducive environment for both local and international mining investments.
The President stated the following in his State of the Nation Address (SONA) delivered on 06 February 2025, “We are breathing new life into the mining industry, which remains one of our most important and valuable endowments. We are on track to implement a new, modern and transparent mining rights system this year, which will unlock investment in exploration and production. We will put in place an enabling policy and regulatory framework for critical minerals. By beneficiating these minerals here in South Africa, we can make use of the extraordinary wealth that lies beneath our soil for the benefit of our people.”
During the Budget Speech delivered on 12 March 2025, by the Finance Minister, Enoch Godongwana however, very little was said about incentivising the mining industry or the proposed regulatory reforms. He reported that there was a 28% decline in the provisional tax contributed by the mining sector.
Revenues generated by mining over the last five years
Over the last half-decade, the mining industry has seen a steady increase in revenue, underscoring its importance to South Africa’s economic framework. The annual revenue figures reported by SARS and the Minerals Council of South Africa are as follows:
From the table below, the impact of the mining industry and the tax revenues generated are significant. These numbers reflect not only the industry’s contribution to revenue collection but also its potential for growth. The impact of the lack of resources and infrastructure required by the mining industry as well as a decrease in global demand had a direct impact on the revenue generated by the mining industry in FY23/24. A further decline is anticipated in the current financial year. Adding to this, mineral royalties are also expected to decline from a projected R16-billion to R11.5-billion.
While there is potential for the mining sector to grow, this expansion requires support from the government to ensure that the sector is not overburdened with high regulatory and infrastructural costs.
Tax Incentives for the 25/26 Financial Year
The only mention of any incentive for the mining industry was with regard to the increase in eligibility of diesel refunds on qualifying purchases to 100% instead of the previous cap of 80%, along with the proposed 5% increase in the carbon offset allowance.
The Minister did not specify any new tax measures in the recent budget speech pertaining to the mining industry, despite the President’s recognition of the mining sector as one of the major revenue contributors to the fiscus in his State of the Nation Address.
The mining industry remains a pivotal component of South Africa’s economic landscape. The President’s recognition of the industry’s significance and the call for regulatory reform highlight the potential for even greater contributions in the future, provided that the proposed changes to regulatory landscape to ease the burden on mining companies are effectively implemented.
The collaboration between the government and the mining sector will be crucial in ensuring that the industry not only remains a key revenue generator but also leads in sustainable and innovative practices. Amidst the recognition of the mining industry and the contributions it has made to the revenue generation over the last decade, it would have been encouraging to see more reforms in the tax framework. Such reforms could incentivise this industry to continue contributing effectively to our economy.
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