Electricity and Control June 2020

WRITE @ THE BACK

Preparing for the Carbon Tax Act in the mining sector

By Francois du Plessis, Operations Director at EDS Systems

It has been reported that the world has seen a dramatic drop in pollution due to the Covid-19 pandemic.This is mainly due to the reduction in nitrogen dioxide usually emitted by road traffic in cities. Mines in South Africa were allowed to restart operations, at 50%, from 20 April 2020 as the country’s lockdown continues. Mining is one industry that needs to gear up for phase 2 of South Africa's CarbonTax Act which will come into effect in mid-2022.

T his means the mining companies have time now to assess and manage their greenhouse gas (GHG) emissions. Why prepare now? Adhering to the Carbon Tax Act and continually working towards reducing emissions is no simple task and this challenge has reached the doorstep of primary emitters as Phase 1 tax returns were due by June 2020, although this deadline has been pushed out by three months. However, they will still need to provide the reports for the time period stipulated in Phase 1. With Phase 2 to follow, mining companies are having to ensure that the entire organisation understands the Carbon Tax Act, and the impact carbon emissions have on the environment, to assist in capturing accurate information in preparation for the deadline. They also need to prepare for the act’s impact in a cost-effective and sustainable manner. If we consider that asbestos was once a common building material but now attracts massive penalties, carbon emissions are following the same route. It's a growing risk and tax liability that every organisation needs to get ahead of. The benefits of the tax might not seem obvious immediately, but they will develop over time as we pay it forward to the future. First considerations The South African government has introduced the Carbon Tax Act with a phased approach and it is reasonable in its scope. There are free allocations that do not attract a tax – but mining operations need to know their carbon emission levels to be able to identify those advantages or reduce their liabilities, and the same applies if they want to capitalise on any long-term opportunities stemming from the act. Awareness of carbon emissions can also improve efficiency and productivity. These organisations also need to bear in mind that poorly calculated tax will cost more and provide a poor picture

of guidance for mitigation and modernisation. In addition, mines need to be aware of their carbon footprint, as this will assist in lowering tax once emissions have been calculated. Not all tax tools are equal There are a few carbon tax tools on the market currently that can calculate carbon emissions. However, companies using these should ensure that the tools incorporate the parameters of the South African Carbon Tax Act, as well as additional functionality that adds value – such as being able to establish a company’s carbon footprint. Importantly, the tool should simplify carbon monitoring and tax calculations, be aligned with the South African Carbon Tax framework with local thresholds, and be able to report, analyse and benchmark against these thresholds. This underpins the ability for the tool to calculate the exact figure – in rand – for which a company would be liable at the end of each reporting period, simplifying an otherwise onerous exercise. Moreover, it will ideally leverage modern digital technologies to create accessibility, better management of the tax's metrics, and engagement with the different levels of a business. As the world becomes more aware of the impact mines have on the environment, lowering their carbon footprint becomes even more important. Fortunately, there are tools that enable mining houses to take carbon tax assessments and calculations by the horns, by reducing complexity and adding value to the business and the environment.

For more information visit: www.eds.holdings

Francois du Plessis, Operations Director, EDS Systems

DIARY DATES – With almost all conferences and exhibitions being cancelled, rescheduled or staged virtually, as a result of the global coronavirus pandemic, Electricity + Control will reintroduce the column of Diary Dates once the global outlook regains a level of stability.

32 Electricity + Control JUNE 2020