Staggering rates hike for mines
A Gauteng municipality is slapping mines with a 257% rates hike, a year after one mine was hit with a 920 000% increase.
|||Johannesburg - A Gauteng municipality is hitting mines with a punitive rates hike of 257 percent, just a year after whacking one mine with an increase of 920 000 percent.
The hikes are linked to an ongoing dispute between the state and mines over housing for mineworkers.
Westonaria Local Municipality in western Gauteng this month gazetted an annual rates increase for mining property of 257 percent, taking rates from 0.028c per rand of property value to 0.1c/R a year, or 10 percent of the property’s value. It is effective from July 1.
Westonaria’s chief financial officer Vincent Bongani Mkhefa said the municipality wants “at least R160 million” a year from the mines.
But Gold Fields said the revaluation of its property a year ago meant a much bigger increase.
“The rates payable on the values of the 25 Gold Fields South Deep mine properties as reflected in the 2014 Westonaria general valuation roll and calculated on the 2014/15 tariffs constituted an increase of about 920 000 percent as from July 2014,” said Gold Fields spokesman Sven Lunsche.
Add the 257 percent increase from July, and the bill rockets.
Gold Fields said the increase wasn’t in line with Westonaria’s budget.
“The municipal budget for the 2015/16 financial year provides for a total operating revenue of R576m, of which the income from property rates on all the properties within its jurisdiction would be R70m.
“However, with the vastly increased tariff for the ‘mining property’ category, the municipality would collect revenue in excess of R786m in respect of mining properties alone,” said Lunsche.
He called the increase unreasonable and economically unjustifiable.
Memory Johnstone, on behalf of the gold producers, called the hike irresponsible and unjustified, saying the sector was already under pressure and had paid corporate tax of R1.6 billion in 2014.
“Currently, around half of the gold mining industry is not profitable or marginal,” said Johnstone.
Westonaria linked the punitive increase to the ongoing dispute with mining companies over housing for their employees.
“The policy of providing a living-out allowance to its employees instead of providing housing creates a serious burden on the municipality as these mine workers end up in informal settlements. The municipality is then required to provide services to those settlements,” said Mkhefa.
“The municipality feels strongly that local mines should contribute to this challenge created by their policy. The best way to address this immediate challenge is not through minimal service charges paid by the mines, but a significant contribution to this community.”
Mkhefa said the municipality had limited sources of revenue.
“The community in Westonaria is contributing over R360m per annum and we think that mines as major land owners in the municipality should also contribute.”
Westonaria is among the municipalities which had their equitable share payments withheld by the National Treasury due to failure to pay services bills and which Eskom later threatened with electricity interruptions until an agreement to pay outstanding bills was signed.
The living-out allowances followed an agreement with the National Union of Mineworkers years ago, for workers housed in hostels who would prefer to live off-site. However, the workers move into the cheaper informal settlements instead and use the extra money for other expenses.
Gold Fields said the living-out allowances would be phased out by 2017, which would help employees avoid living in informal settlements, and the company already accommodated 1 048 employees in recently refurbished family units and single units at South Deep.
“We are in the early stages of implementing plans to build further houses and selling current mine-owned houses to employees near South Deep, while at the same time assisting those employees who don’t live in hostels to buy homes or rent decent and affordable accommodation,” said Lunsche.
Johnstone said the provision of decent and affordable housing was a challenge not only for the mines but also other sectors.
“In the gold sector, some 50-60 percent of employees have voluntarily elected to remain in company hostel accommodation and, as a result, there have been few sizeable informal settlements close to the mines.”
Higher than in Joburg
The Westonaria increases make the property rates for a mine, a business or an industry higher in Westonaria than in Joburg.
For a property worth R1m, Westonaria now charges R100 000 a year in rates for mines, or R31 000 a year for a business or industry. Joburg charges R18 287 a year in all three categories for 2015/16.
Farming is cheaper in Westonaria (R11 000 a year compared to Joburg’s R18 287 on a property worth R1m) but residential rates are higher (R15 000 a year compared to Joburg’s R6 531).
louise.flanagan@inl.co.za
The Star