Banele Ginidza
Petrochemical giant Sasol is engaging with a team from the European Union (EU) to explore the production of clean aviation fuel in a bid to address impending trade challenges posed by Carbon Border Adjustment Mechanism (CBAM) taxes on South African exports.
Minister for Trade, Industry and Competition, Parks Tau, highlighted this strategic collaboration during his Budget Vote on Friday, emphasising the government’s proactive approach to mitigate the potential impact of CBAM.
CBAM has raised concerns in many sectors, being perceived not only as an environmental mechanism but also as a barrier to trade.
Tau stated that the South African government was actively negotiating with the EU, alongside garnering support at global platforms such as the World Trade Organisation (WTO), to underscore the importance of treating CBAM as a broader trade issue that requires comprehensive dialogue.
He said this was part of plans including meticulously curating a R700 billion pipeline of credible, investable projects designed to revitalise key sectors in South Africa.
This initiative spans critical sectors from 25GW of transformative energy projects worth R339bn – solar parks, wind farms, battery storage, gas-to-power – alongside upgrades in transport, logistics, manufacturing, agro-processing, and digital infrastructure.
“But we haven’t stopped there and wallowed in self pity. We have said let’s engage the EU and ensure that we are able to find solutions,” Tau said.
“We were at a Summit with the EU at which we agreed on what is developing as a model trade agreement called the Clean Trade and Investment Partnership. They committed to an intial R90bn to facilitate clean trade and investment between our respective participant countries.”
Tau said the agreement opens vital duty-free access for exports in key sectors like dairy for the local production of Amarula, sustainable aviation fuel, new energy vehicles, green hydrogen, and battery components, accelerating South Africa’s industrial decarbonisation.
Further supporting South Africa’s economic landscape, Patel revealed that the Department of Trade, Industry and Competition (the dtic) has proposed a normalisation of trade relations with the United States.
The plan involves securing gas imports from the US—essential for mitigating the domestic ‘gas cliff’—in exchange for concessions in the automotive and steel industries, as well as agreements on seasonal produce.
“We are currently in the process of finalising the details of what constitutes that partnership. But a particularly important issue in that regard is a move away from a pit to port approach where the West and now even the East will essentially come [and] get into our minds, get products, get minerals, get them to the port and out of Africa,” Tau said.
“We said it must be premised on industrialisation, co creation and co-development.” Tau said.
He said to stop the “bleeding” in the ferrochrome and automotive sectors, government had to bail out Arcelormittal South Africa (AMSA), not necessarily as an individual company but for the sustainability of the downstream sector.
“In terms of the transition that is happening in the sector, we are experiencing problems. We have seen for example Mercedez Benz’ decision based on that there is lower demand in two areas. There is a reduction in demand for sedans in favour of SUVs,” Tau said.
“Secondly, there is reduction in demand for internal combustion engines vehicles. Because we now want to produce in a different location hybrid vehicles, we have to adjust to that reality, we have seen the impact in component manufacturers.”
He added that negotiations were continuing with Goodyear Tyres to “stem the tide” after the tyre manufacturing firm announced that it was closing its plant in Kariega as part of a restructuring strategy affecting the Europe, Middle East, and Africa (EMEA) region.
Tau said he anticipated meeting his Chinese counterpart, Wang Wentao, on how best South Africa can benefit from China’s announced preferential market access for African countries as South Africa intensifies work on the Framework Agreement implementation with China, with a particular focus on diversifying trade.
“In the Gulf, we have value that is waiting to be extracted. We have been having fruitful consultations with Saudi Arabia to conclude our long overdue Joint Economic Commission. The commission will unlock investment in aegriculture, mining capital equipment and chemicals,” Tau said.
“We have curated a collection of bankable projects to unlock long standing investment commitments with other members of the Gulf Cooperation Council (GCC), including the UAE and Qatar.”
BUSINESS REPORT
