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Business Reporters
PLAYERS in the mining sector have called for the scrapping of the two percent Environmental Management Agency (EMA) fee charged on them, saying the regulatory cost was a barrier to investment.
A recent report on the state of the mining industry in the country by the Chamber of Mines Zimbabwe revealed that all mining corporations that participated in the survey said the environmental fees in Zimbabwe were too high.
“All respondents indicated that the fee for exploiting the environment at two percent of the gross revenue is extremely high and undermining the competitiveness of the local mining industry in terms of attracting foreign direct investment as well as the viability and sustainability of the mining industry,” reads part of the report.
“In addition, all respondents concurred that the Environmental Impact Assessment (EIA) fees at $210 or 1,2 percent of the cost of the project . . . is a huge barrier to investment.”
The EMA Act provides for the sustainable management of the natural resources and protection of the environment, the prevention of pollution and environmental degradation.
However, numerous surveys have also found fault with the level of environmental fees and their effect on the economy.
In its 2014 cost driver analysis survey, the Zimbabwe Economic Policy Analysis Research Unit (Zeparu) indicated that stakeholders across industry sectors have identified problems with the EMA regulations.
“First, they cited that the environmental standards were set at a very high level for a country of Zimbabwe’s level of development. Secondly, there was no reasonable period given to comply with them, with the main interest being the collection of unreasonably high fines as opposed to providing guidance and incentives to comply with the regulations,” said Zeparu.
The main subsidiary regulations emanating from the EMA Act include the Environment Management (effluent and solid waste disposal) Regulations of 2007, Environmental Impact Assessment and Ecosystems Protection Regulations, Air Pollution Control Regulations and Environmental Management (Hazardous substances, pesticides and other toxic substances) Regulations.
The Chamber of Mines report said a cap of $2 million set out in the 2016 National Budget statement as maximum amount to be charged by EMA was considered high compared to other countries with South Africa having an upper cap of R10 000.
The report says all the respondents recommended that the two percent EMA fee be removed in line with the recommendation by the Reserve Bank of Zimbabwe in its 2016 Mid-Term Monetary Policy Review.
The respondents, reads the report, are suggesting replacing the fee with an insurance product, which is being finalised by the Chamber of Mines.
“As for EIA levy, all respondents recommended the reduction of the levy to reflect the capital needs of the industry and also that the levy should be treated as an administrative charge that should not be linked to revenue,” reads the report.
Under the EMA Act any infrastructural development has to undergo an environmental assessment where companies are made to pay 1,5 percent of the total cost.
The environmental watchdog has also been accused of scaring away investors through its numerous licensing fees, which have an effect of increasing the cost of doing business.
Media records state that out of the estimated $500 million cost for the Kariba Hydro Power expansion project, for instance, EMA demands $7,5 million.
The Ministry of Finance is also on record saying a number of investors had lost interest in the country citing high EMA levies.
This view has been confirmed by Zeparu who contend that EMA regulations were deterring both foreign and domestic investment, particularly in view of the five percent up-front cost for environmental compliance certificate that is assessed on the value of any greenfield investment project.
“This results in a prohibitive cost, particularly for large investments, for a service that according to interviewed stakeholders, can cost only $50 000 in South Africa,” said Zeparu.
Online Reporter