Limpopo is historically and presently renowned for its mineral resources. A recent study by DMT-Kai Batla on behalf of MMSEZ compiled a list of the minerals found in the province in varying degrees. The list includes chrome, copper, dimension stone, fluorspar, graphite, iron ore, limestone, manganese, platinum group metals, precious stones (diamonds and corundum), semiprecious stones, silica, titanium, tungsten, uranium, vanadium, and vermiculite. The MMSEZ seeks to provide a platform for the beneficiation of some of these minerals and has attracted a conglomerate of investors seeking to establish beneficiation plants.
Some of the operations envisioned are listed below:
- Original equipment manufacturing plants
- Component manufacturing
- Fertiliser manufacturing and blending
- Agro-chemical manufacturing
- Petro-chemical manufacturing
- Iron and steel plant
- Stainless steel plant
- Ferrochrome plant
- Chrome plating plant
- Lime, phosphate and chemical plants
Investment Incentives and Support
The South African government initially established the Industrial Development Zone programme, later replaced by the Special Economic Zone (SEZ) programme to attract domestic and foreign direct investment and exporting of value-added commodities.
The SEZ Act offers a number of financial and tax incentives to businesses located in an SEZ to ensure their growth, enhance revenue generation and job creation, attract investment and strengthen international competitiveness.
These incentives include:
Subject to the requirements contained in the Income Tax Act of 1962, businesses located within in an SEZ may be eligible for normal income tax relief, including a reduced rate of corporate income taxation of 15% instead of 27%.
Businesses operating within an SEZ may be eligible for a 10% building allowance, subject to the requirements contained in the Income Tax Act of 1962.
The employment tax incentive is aimed at encouraging employers to hire young and less experienced work seekers. All employers of low-salaried employees (earning below R60 000 per annum) will be entitled to the employment tax incentive. The employer can claim the incentive by reducing the payas- you-earn (PAYE) tax payable in respect of all qualifying employees.
SEZ companies located within a CCA will be eligible for VAT and customs relief in accordance with current VAT and customs legislation. Characteristics of a CCA include an import duty rebate and VAT exemption on imports of production-related raw materials, including machinery and assets to be used in production, with the aim of exporting the finished product as well as VAT suspension under specific conditions for supplies procured in South Africa.
The 12I tax incentive is designed to support greenfield investments (i.e., new industrial projects that utilise only new and unused manufacturing assets), as well as brownfield investments (i.e., expansions or upgrades of existing industrial projects). The new incentive offers support for both capital investment and training.
The Department of Trade, Industry and competition offers a 20–30% grant to support capital expenditure investments in the agro-processing sector for eligible businesses. The maximum grant is R20 million. An additional 10% grant is provided for projects contributing to additional economic criteria such as employment, transformation, geographic spread (export) local procurement.
This incentive provides additional tax allowance deductions to employers for qualifying learnership agreements. The additional deductions are intended as an incentive for employers to train employees in a regulated environment to encourage skills development and job creation.
The employer is allowed a tax deduction from their trade per qualifying learner, depending on the NQF level, amounting to R20 000–R40 000 per learner per tax year of assessment in training and R60 000 if the learner is a person with disability.
This incentive provides additional tax allowance deductions to employers for qualifying learnership agreements. The additional deductions are intended as an incentive for employers to train employees in a regulated environment to encourage skills development and job creation.
The employer is allowed a tax deduction from their trade per qualifying learner, depending on the NQF level, amounting to R20 000–R40 000 per learner per tax year of assessment in training and R60 000 if the learner is a person with disability.
The BIS financial incentive provides for the accelerated quantitative and qualitative increase and participation of Black industrialists in the national economy. It provides for a cost-sharing grant ranging from 30%–50%, to a maximum of R50 million.
Businesses operating within an SEZ may be eligible for a 10% building allowance, subject to the requirements contained in theIncome Tax Act of 1962.
The SPII is designed to promote, through the provision of financial assistance to businesses, the development of innovative products and/or processes.
SPII is focused specifically on the development phase, which begins at the conclusion of basic research and ends at the point when a pre-production prototype has been produced. It is calculated as a percentage of qualifying costs incurred in the development activities of a specified project. The grant is limited to R 5 million.
This incentive supports the construction of new or expansionary infrastructure made by private companies. The grant covers 10%–30% of qualifying infrastructural development costs, limited to a maximum R50 million. Agroprocessing applicants obtain 10%–50% of the total infrastructural development costs with a maximum grant of R50 million. Projects that alleviate water and/or electricity dependency on the national grid obtain a grant coverage of 10%–50%, limited to a maximum of R50 million.
