Decarbonisation vital for market access

The EU’s carbon border taxes, known as CBAM, are set to raise costs for South African exporters in carbon-intensive sectors such as steel, aluminium, cement, fertilisers, electricity, ammonia and hydrogen. “South Africa is emerging as a carbon outlier in the EU’s metals supply chain. Without meaningful decarbonisation efforts, both the steel and aluminium sectors will face increasing CBAM charges that could squeeze margins, reduce demand and erode long-term market access,” says Michael Lengahan, CBAM lead at the Anthesis group. CBAM will affect South African export logistics mainly by adding a data, compliance and routing burden to shipments heading for Europe. “Europe is effectively charging for carbon built into imported goods, which means South African exports carry an added cost because of the country’s coal-heavy grid. “The issue is no longer about sustainability as a principle but about remaining competitive: decarbonise or risk losing access to key markets. Those that move early can limit costs and hold their ground, while those that delay will gradually lose market share,” according to the trialogue Knowledge Hub. It says the first to feel the impact will be SA iron and steel exports, with around 16% of South Africa’s iron and steel exports at risk under CBAM. However, exports to Europe have been highly volatile. SARS data shows that the value of steel exports to the EU dropped sharply – from R1.48 billion in January 2022 to R228 million in January 2025, reflecting the decline of the SA iron and steel sector and its inability to compete in a glutted market. The importance of reducing the carbon footprint of SA exports to the EU is the November 2025 signing of the first Clean Trade and Investment Partnership (CTIP) between the EU and SA. Clean Trade and Investment Partnerships are a new policy tool announced by European Commission president Ursula von der Leyen in 2024, aimed at supporting the EU’s decarbonisation and competitiveness objectives as an external instrument of the Clean Industrial Deal, according to the European Commission. Speaking at the first business-to-government dialogue under the CTIP during the March 2026 energy indaba, SA’s deputy minister of trade, industry and competition said the CTIP would expand trade volumes while reshaping value chains. “It will align decarbonisation with industrialisation, and investment with local economic development, ensuring that South Africa participates as an industrial partner in clean supply chains rather than as a supplier of raw materials.” In its response to the signing of the CTIP, Business Europe stated: “Currently, unreliable rail infrastructure is a major barrier affecting offtakers of South African raw materials. “A focus of EU development support on rail corridors is key for transporting raw materials.” ER