Role of SEZs expanding in African mining

Over the last decade, dozens of new special economic zones (SEZs) have been created to cater to the mining industry and as new zones are announced, this will change many of the underlying assumptions about the African mining industry, says Adrianople Group cofounder and chief researcher Thibault Serlet.

He notes that SEZs are business parks or cities that have been created for the purpose of attracting foreign direct investment. There are more than 12 000 SEZs worldwide, roughly half of which have been extensively mapped out.

African governments see SEZs as a way to contain the harmful effects of the mining industry while retaining the economic benefits, Serlet says.

Several South African SEZs have been specifically created for the purpose of fostering innovation in the mining sector.

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The valley will offer various incentives to companies including significant corporate income tax breaks, wage incentives for salaried employees, and the ability to write off expenses on various types of capital goods.

The Musina-Makhado SEZ, in northern Limpopo, will be home to a Chinese coal-fired steel refinery. Chinese companies located in the zone will be allowed to benefit from South Africa’s industrial incentives.

The government of Zimbabwe granted miner Tharisa SEZ status. SEZ status means that Tharisa will receive reduced tax rates, duty-free importation of raw materials and equipment, and benefits from less strict currency exchange rules. Other countries such as Senegal and Nigeria are also creating new SEZ frameworks specifically targeting mining.

This trend of creating mining-centric SEZs will play a major role in the African mining industry in years to come, Serlet concludes.