South Africa’s Minerals Council finds that the additional expense for miners from the new carbon tax could be as high as R5.5 billion annually.
The council extrapolated this estimate from a survey of 18 companies.
South Africa and a host of other countries implemented a Carbon Tax with effect from June 1, 2019. The tax is payable by polluters as compensation for their carbon footprint. Environmental authorities hope that the tax would be a deterrent and therefore help to reduce greenhouse gas emissions.
Address climate change through a ‘toolbox’ of measures
The Minerals Council is of the view that the authorities should consider appropriate regulations, tax-free incentives, and other climate change actions alongside the Carbon Tax in an overall framework.
They should not, therefore, implement the Carbon Tax as an isolated measure to combat the ill effects of climate change.
“(This) is likely to be damaging to carbon-intensive sectors with no pathways for offsets,” the Council said. “We believe that the transition to a low-emissions economy should be balanced and supported by a competitive tax system which is critical for investment in capital intensive industries such as mining.”
Carbon Tax and the mining sector: important considerations
The Council made the following points in connection with the recently introduced Carbon Tax:
- South Africa may achieve its Paris commitments without the need for the carbon tax. Slower economic growth, a 523% increase in electricity tariff over the past decade, and a shift out of carbon-intensive sectors such as mining would already have reduced GHG emissions significantly.
- The mining industry would suffer an additional burden of R5.5 billion annually from the new tax.
- Mining companies face innumerable regulatory and environmental hurdles in implementing any projects for renewable energy.
The Council suggested that the implementation of the carbon tax should be delayed until the entire legislative and regulatory ecosystem is put in place.
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Feature Image by Michal Jarmoluk from Pixabay