JOHANNESBURG (miningweekly.com) – National Treasury must abandon its plans to introduce carbon tax, which will result in the closure of smelters at a time of desperate need for job retention and export promotion.

This is the consensus of opinion canvassed by Mining Weekly Online following last Friday’s release of the Integrated Resource Plan (IRP).

With the IRP enhancing the prospect of carbon emission reduction because of the backing it gives to renewable energy, Treasury’s continued insistence on the imposition of carbon tax is being seen as superfluous.

The main purpose of the carbon tax is to generate funding for research and development into carbon emission reduction, which the IRP now promises.

“The need for a carbon tax has declined significantly in the light of the IRP,” a ferrochrome industry source commented to Mining Weekly Online on Tuesday.

State electricity utility Eskom is the source of much of South Africa's carbon emission. With promulgation and implementation of the IRP, renewable energy generation will increase significantly and result in the carbon intensity of Eskom declining significantly in the next ten to 15 years, pointing to a carbon tax not being needed, as many other countries have found.

“Lower carbon emission will happen as a result of the generation of renewable energy, which means there is no need to introduce the carbon tax that will put South African ferrochrome smelters out of business and result in even more raw South African chrome ore being sent to China, where smelters put more carbon into the atmosphere than South African smelters,” the source reiterated.

South Africa has already lost its ferrochrome leadership to China, which now produces most of the world’s ferrochrome by smelting large amounts of imported South African chrome ore, but in a less environmentally protective manner.

“If carbon tax is imposed, more South African smelters will close, more chrome ore will go to China, where smelters are far less efficient from a carbon perspective than South African smelters, and more carbon will be emitted than from smelters here.

“What Treasury's insistence on carbon tax will really be doing is exporting South African jobs at a time when the country needs every job it can get, and allowing more carbon to be emitted elsewhere, which makes no sense,” the source said.

The IRP is seen as the correct route owing to its focus on renewable energy and Treasury needs to concede that its ongoing carbon tax threat is needlessly damaging to a country now in a technical recession.

“Throw the carbon tax idea away and rather focus on the introduction of an ore export tax, which would do a world of good for the South African economy by restricting the outflow of raw ore and boosting local ferrochrome production,” the industry participant noted.

The much-needed introduction of an ore export tax would continue to provide the Treasury with a source of tax revenue and likely attract new investment in the building of more ferrochrome smelter capacity in South Africa, against the background of Southern Africa hosting the overwhelmingly largest proportion of the world's chromium resources and reserves.