South African aluminium major, Hulamin, has recently emphasized the need to increase the use of recycled materials in industrial processes to minimize emissions. This was stated at an exclusive event held in Johannesburg on Thursday 13 February covering new laws applying to European based companies and carbon emissions.  During the session Hulamin advocated for greater investment in renewable energy.

In light of the fact that the company remains dependent on the national grid, Hulamin suggests that the South African government should strengthen its carbon tax policy, using revenues to support industrial decarbonization and prevent companies from shifting emissions to local markets ("carbon leakage").

Meanwhile, leading South African paper and plastic packaging firm, Mpact highlighted the distinction between Scope 1 and Scope 2 emissions. While Scope 1 covers direct emissions from operations, Scope 2 includes purchased electricity, which carries higher carbon costs due to Eskom’s reliance on coal. Mpact has invested in large-scale solar projects and wheeled energy solutions to mitigate emissions. However, they stressed that South Africa’s current carbon tax is only one-fourth of the EU price, making local industries less attractive to European Companies.

The session held at Sandtower Hotel in Sandton, was designed to highlight the new Carbon Border Adjustment Mechanism (CBAM) being implemented by the European Union. CBAM is a central pillar of the European Union’s strategy to reach carbon neutrality by 2050. Designed as an environmental measure rather than a tax or tariff, CBAM replaces the EU Emissions Trading System (ETS) and ensures that imports to the EU are subject to the same carbon costs as domestic production. The system is aimed at companies, not countries, and calculates fees based on the actual carbon content of imported goods.

South Africa is significantly affected due to its exports in iron, steel, and aluminium, while fertilizers and electricity—though covered by CBAM—are not currently exported to the EU. A major challenge is the high indirect costs of carbon-intensive electricity from Eskom, which raises overall production costs beyond those in competing markets. The discussion highlighted that CBAM is not intended as a protectionist tool, nor does it dictate how companies should decarbonize. Instead, it provides a framework where businesses must report emissions transparently and comply with EU carbon pricing policies.

CBAM is being introduced gradually, with financial obligations beginning in 2026 and phasing in fully by 2034. During this transition, the EU will also reduce free carbon allowances previously granted to industries under ETS. Importantly, CBAM operates under World Trade Organization (WTO) guidelines, ensuring it aligns with international trade laws.

For compliance, EU importers must report emissions associated with their products, requiring accurate data from exporters. South African industries have raised concerns over disclosing production methods, particularly regarding the use of recycled scrap in steel production. From 2026, independent third-party verification of emissions will become mandatory.