Carbon tax estimated to cost top mining companies over R500m a year

CEO of the Minerals Council South Africa, Roger Baxter.

The Minerals Council South Africa (MCSA) has called for the implementation of the “challenging” carbon tax to be delayed until all the enabling regulations and the establishment of a legislative regime providing for carbon budget (as proposed in the Climate Change Bill) are in place.

In a statement released to the media yesterday (Thursday), CEO of the MCSA, Roger Baxter, said that the “significant uncertainty” associated with phase 2 of the implementation of the carbon tax would be materially negative for South African mining, in the absence of any tax-free incentives.

He pointed to a survey undertaken by the council last month of the 18 larger companies in the sector highlighting that across the companies surveyed, carbon tax costs had been estimated at as much as R517 million a year in phase 1.

“In the absence of the offsets allowed in phase 1 (as this information is still not known), the carbon tax liability for these 18 companies is estimated to increase to R5.5 billion per year in phase 2,” Baxter pointed out.

He was quick to assert that the MCSA “fully supported” South Africa’s commitment to reducing greenhouse gas emissions (GHG) in line with the Peak, Plateau and Decline (PPD) trajectory and Nationally Determined Contributions (NDC) under the Paris agreement.

“But the planned carbon tax, in the absence of any other climate change measures in the overall ‘toolbox’ that includes incentives and not only disincentives and necessary supporting regulation, is likely to be damaging to carbon-intensive sectors with no pathways for offsets,” Baxter added.

He said the council believed that the transition to a low-emissions economy should be balanced and supported by a competitive tax system which was critical for investment in capital-intensive industries such as mining.


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