AfriSam continues to be committed to creating a sustainable life for our future generations, reflecting our belief in “Planet” as one of the core values that drive our business.
The primary purpose of Carbon Tax is to lower greenhouse-gas emissions. It is ultimately designed to encourage consumers to make more environmentally-friendly choices. In April 2016, South Africa was party to the Paris Agreement on climate change. In terms of this agreement, South Africa committed to reduce its greenhouse gas emissions by up to 42% by 2025.
Carbon Tax came into effect on 1 June 2019. AfriSam started passing the Carbon Tax on to its customers from 1 July 2019.
The South African Carbon Tax started at a base rate of R120 for every ton of CO₂ emitted. The carbon tax rate increased by 5.2% in 2020 from R127 per tonne CO₂ to R134 per tonne CO₂ in 2021.
The SA Revenue service publishes the effective rate on an annual basis.
However, Government has made provision for a number of allowances that will reduce this base rate for each clinker producer, based on a number of complex factors. This means that Carbon Tax payable will differ by product for each of the cement manufactures in South Africa.
As CO₂ is only emitted during the clinker manufacturing process, only cement companies that manufacture clinker in South Africa will be taxed. Based on this, blenders and importers of clinker / cement are not subject to this tax. For Blenders, their input costs will increase and are thus likely to increase their own selling prices to accommodate for this.
No, the Carbon Tax is calculated according to the actual carbon footprint of each cement product. Therefore products with a higher carbon footprint will be taxed at a higher amount compared to cement products with a lower carbon footprint.
For AfriSam, the Carbon Tax will result in an approximate additional R20 – R30 per ton of cement, depending on the carbon footprint of the product.
This tax is applicable to South Africa and applies to clinker manufactured in South Africa. This means that this tax cannot be passed on to customers in Lesotho and Eswatini.
In terms of the Carbon Tax Bill, AfriSam has adopted a similar approach to other industries such as the motor and tyre industries. The objective of the Carbon Tax Bill is to motivate consumers to make more environmentally responsible choices. As such, AfriSam has invested significantly in its production processes and equipment to keep its carbon emissions as low as possible. AfriSam is transparent about the carbon emissions and associated tax for each of its products and customers will have the opportunity to opt for a product that carries a lower CO₂ footprint.
Unfortunately, given the current market conditions and the increase of input costs, AfriSam is not able to absorb the additional cost of the Carbon Tax. AfriSam would also like to encourage customers to engage with our product technical teams so that they can optimise their mix designs through the addition of extenders or additives.
Even though it is referred to as Carbon Tax, it is actually an environmental levy. For this reason, AfriSam will be charging VAT on the Carbon Tax amount that customers will be charged.
Carbon Tax does not apply to AfriSam’s Aggregate products.
AfriSam included the cost of the Carbon Tax levied for all its Readymix products with effect from 15 July 2019 in its Readymix product prices. The magnitude of the Carbon Tax increase is influenced by the cement content and cementitious type of the concrete mix used. Increased use of cement extenders (slagment and fly ash), where appropriate for the application, will reduce the impact of the Carbon Tax on the concrete products.
Customers can contact our Centre of Product Excellence by calling the customer service line and selecting the ‘product technical’ option.