The South African government needs to consider holding back the imposition of the 2c/kWh environmental tax until the country has worked through the energy crisis, says Chamber of Mines economist Roger Baxter.

“We have been arguing, and we are going to continue arguing, that government needs seriously to consider holding in abeyance the imposition of the 2c/kWh environmental tax until such time as we have got through this immediate electricity crisis and until such time as companies have been given sufficient opportunity to put in place the remedial measures to become more energy efficient over time,” says Baxter.

He says that mining companies that were paying 17c/kWh in October last year are going to be paying 50% more from October 1.

“That’s a huge increase, given the fact, for deep-level mines, the electricity accounts for as much as 10% of cash production costs,” he adds.

The Treasury is the driver of the issue and the entire business community is concerned about the issue and so is labour.

“Cosatu have jointly signed a letter with Busa, submitted to the Minister of Finance, expressing our concerns.

“We are sitting with inflation of 18,9% on the producer price index, 13,4% on the consumer price index and government wants to add another 10% on to electricity prices just to fund an environmental tax. We are really concerned about it,” Baxter, who raised the issue with government during the Mining Summit, says.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.