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Gasification Island

Qualification as a Special Economic Zone

In July 2015 the South Africa Cabinet gave the Minister of Trade and Industry Rob Davies the goahead to designate the Musina/Makhado Special Economic Zone (SEZ). SEZs are designated geographical areas with special incentives and regulatory regimes used to encourage firms, particularly foreign firms, to locate their operations in these areas. EIS, the developer of the LEIP, applied for approval in principle for the LEIP to be declared as a SEZ i.e. the Musina SEZ. On the 16thAugust 2013, the LEIP received approval in principle from the Director General Lionel October of the Department of Trade and Industry (dti) indicating that the LEIP will be declared an anchor project and Operator within the Musina SEZ, once the Musina SEZ is designated by the dti Minister. Again on 16th July 2014, the Director General (DG) of the dti wrote to EIS: “In recognition of the efforts to create the first zero-solid waste Eco-Industrial Park in the world, the Department of Trade and Industry (the dti) offers it support for the industrial park project in Musina”. In line with the SEZ Act’s requirements, EIS has acquired the necessary land, and will operate the LEIP under the auspices of and subject to SEZ regulations as promulgated by the dti.

The LEIP is currently in the process of submitting a formal application to the SEZ Advisory Board, to be designated an Operator within the Musina SEZ.

Musina SEZ Entitlements

The SEZ Act outlines the benefits associated with South African SEZs and has officially been promulgated. Generally, the benefits offered to firms for locating within a SEZ, include inter alia tax reductions or exemptions; duty free imports of capital goods and inputs; streamlined customs and administrative procedures; and financial assistance for green fields projects. Other forms of SEZs include export processing zones; free ports; enterprise zones; industrial zones; Industrial Development Zones and technology parks. The use of these zones has grown significantly over the last couple of decades, particularly in developing countries.

The Musina SEZ will be a specifically delineated duty free enclave, deemed as a foreign territory for the purposes of trade operations and duties and tariffs. Goods and services entering the Musina SEZ from domestic suppliers would be treated as exports and goods coming from the SEZ area into domestic South Africa should be treated as imports. Business units within the Musina SEZ may be set up for the beneficiation of minerals and gas resources; manufacturing of goods; rendering of services such as import/export; incubation of SMMEs; skills development as well as Research and Development services. These business units may be set up in public, private, joint sector or in partnership with the State Government.

The Musina SEZ and business units within the SEZ will be allowed the following entitlements for development, operation and maintenance of their infrastructure and facilities within the park:

  • 15 % corporate tax benefit in comparison to 28 % in other regions in the country;

  • building allowances

  • employment incentives

  • customs controlled areas

  • 12i tax allowances (designed to support greenfield investments)

  • Import / procure goods without payment of Customs / Excise duty

  • Exemption from VAT

  • Relaxed foreign investment norms.
     

It is important to note that the success of the Musina SEZ would result in the generation of such significant additional economic activity, that the revenue gains from additional economic activity in South Africa would be many times the revenue loss implied by the above entitlements.

LEIP Motivational

Factors for SEZ Status

Environmental Considerations

  1. The layout of the LEIP, including infrastructure was designed to integrate and preserve sensitive aspects of the natural environment. Sensitive aspects included for example, river beds; baobab trees; hilly outcrops and heritage aspects.

  2. The Plasma Waste Gasification Plant will render the LEIP the world’s first zero solid-waste Eco-Industrial Park.

  3. The LEIP administrative and industrial buildings will aim for a Six Star Green rating in terms of the South African and Australian Green Building Council’s Green Star Rating, respectively. Six green stars are regarded as world leadership

  4. The Water Treatment Plant will be designed in an environmentally sensitive manner that enhances biodiversity as well as recreational activities within the park.

  5. A Nature Park was created, within the LEIP boundaries, to offset the residual impacts associated with the land use change imposed by the SEZ. The Nature Reserve will be developed into an independently run eco-tourism SMME.

  6. Clean technologies are discussed in the LEIP Feasibility Study.
     

Infrastructure

  1. The site location makes optimal use of existing road and rail infrastructure.

  2. The LEIP will provide its own power and will therefore be independent of the national power grid.

  3. Permanent housing that will be provided for construction workers will be handed over to the Musina municipality upon completion of construction activities.

  4. Provision of utilities including water; power and waste management services to Musina, for supply to the above-mentioned permanent housing development.
     

Services within the
LEIP SEZ

  1. Supply and distribution of water and power to all facilities within the LEIP, including SMMEs; eco-tourism area and the industrial ecology faculty.

  2. Waste management services.

  3. Carbon capture and conversion to methanol via syngas.


Facilities Management

  1. Business incubation centre for SMMEs.

  2. Skills training for SMMEs.

  3. Research and Development will be achieved through the Industrial Ecology Faculty.

  4. Safety and Security within the LEIP.

  5. Emergency medical facilities.

  6. Firefighting facilities and equipment.

  7. Staff recreation.

  8. LEIP Asset Management and Maintenance.
     

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