South Africa's Mining Industry Sees Taxing Carbon Conundrum

analysis

South Africa's mining industry is ringing alarm bells over the incoming carbon tax. Like so much on the policy front here, concerns centre on uncertainty. And unlike other sectors, the mining industry cannot pass on the anticipated costs to its customers. It has to take them on the chin with a direct hit to the bottom line.

In August, Minerals Council South Africa surveyed its members on the issue of the carbon tax which became law in May and will come into force in 2022. The response was sobering.

"Across the 18 mining companies that responded to the survey, the carbon tax is estimated to cost as much as R517-million a year in phase 1 of the implementation of the tax," the council said in its annual "Facts and Figures" report on the industry which was released this week.

"In the absence of the offsets allowed in phase 1, the carbon tax liability for these 18 companies is estimated to increase to R5.5-billion for each year of phase 2. This represents a 972% increase in the tax liability," it said.

That would be a significant burden on an industry that has struggled for years with volatile prices, surging power and...

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