South Africa's proposed carbon tax could cost PPC ZAR90m

South Africa’s proposed draft carbon tax bill published in November could see PPC liable for an estimated ZAR90m in carbon tax, according to Pretoria News.

However, PPC CEO, Darryl Castle, said the cement producer was currently looking at a number of initiatives to reduce this tax burden. He added that the tax regime did not apply to imports into South Africa. Furthermore, he said it had not been meaningfully implemented elsewhere and Australia had scrapped a similar initiative due to the impact on the country’s industry.

"PPC is ready for the implementation of the carbon tax regime in January 2018. However, we will continue to engage the government on this matter," he said.

The South African cement industry is affected not only by excess production capacity but also by intensive competition from imported cement, resulting in significant pressure on producers’ margins and limited room for increasing prices.

The revised carbon tax bill is due to be published for public consultation and go to Parliament in the middle of this year, according to the Budget speech last month.  The tax structure currently proposed for the first phase would see an environmental levy of ZAR120/t CO₂ emitted.

Mr Castle said there were allowances that PPC qualified for in the first phase up to 2020, which substantially reduced the effective tax rate to less than 30 percent of the proposed value.