Welcome to the Zambia Extractive Industries Transparency Initiative (EITI) newsletter!

The Mine Safety Department (MSD) under the Ministry of Mines and Minerals Development in Zambia has revealed that an investment policy for the management of the Environmental Protection Fund (EPF) has been drafted to guide the investment decisions of the Fund. The policy is yet to be signed by the Minister of Finance. It is hoped that the policy will energise the fund administrators to explore more investment opportunities beyond the current practice of placing of investments on fixed term deposits with various financial institutions.

The contributions to the fund are dependent on the environmental audits on the mining firms that are enforced by the Director of Mine Safety. The audits are conducted to ascertain the extent of the environmental liability caused by each individual mining firm.

The payment obligations to the fund has two components.The first component consists of the following categories: five percent (5%), ten percent (10%), or twenty percent (20%), which depend on the classification of each particular mine and represents the component of the liability that needs to be paid as cash directly into the fund.The second component consists of the balance which is allocated as 95%, 90% or 80% of the environmental  liability which needs to be secured in form of a bank guarantee.

The EPF is provided for under the current Mines and Minerals Development legislation which stipulates how contributions by mining companies should be made upon satisfaction of the environmental audit and submission of the environmental report to the Director of Mines Safety. The fund currently operates under the following fundamental guidelines in particular SI No. 102 of 1998:

• The cash payment into EPF to be in hard currency;
• the developers contributions to EPF shall be made in hard currencies (Cap. 213, S.76 (2) (b) and S.I 102 of 1998 (Regulation 8 (2));
• The balance on deposits lodged under S.1. 29 of 1997;
• Regulation 66 (1), (2) and (3) shall be secured with the Fund by the developer by way of lodgement of a Bond or Bank Guarantee to be determined by the Minister (Cap. 213, S. 76 (1) (b);
• The funds to be Index-Linked, no interest earned;
• The developer’s contribution shall retain its time-value with respect to inflation as calculated relative to hard currency (S.I. 102 of 1998 Regulation (8) (3)).

The legislation further provides that at the expiry of a licence or permit, the developer shall be refunded the amount deposited to the extent that such amounts were not appropriated by government for payment of any progressive rehabilitation costs [Cap. 213, S. 82 (3) (a) and (b)].  The refund shall not accumulate interest; and – only the Fund Committee can approve withdrawals from EPF.

In the event that a developer is directed by the Director of MSD to take specific remedial action, and fails to do so, the Director shall execute the remedial action using the developer’s contributions to the Fund which becomes recoverable (Cap 213, S/78 (1)).

The developer’s fund so used shall not exceed the amount of cash deposit lodged by each one to the Fund (Cap 213, S. 82 (3) (b). This therefore means that each developer can use only their contribution and will only get their contribution back. The legislation further stipulates that the administrative expenses of operating the fund shall not exceed 1% of the total income of the Fund except during the commissioning of the office of the EPF Manager (S.I. 29, 1997 Regulation (5)).

As at 30 September 2018, a total of USD 27. 5 million was held in the fund.