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Friday, October 10, 2008 | mining_fin SA's carbon consideration | mining_fin SA's carbon consideration:

SA's carbon consideration

Posted: Thu, 09 Oct 2008

[] -- THE South African government has been vocal about its intention to place a price on carbon pollution, probably in the form of a carbon tax.

When such an initiative is introduced, it will create an instant liability on the balance sheet of many mining businesses operating in South Africa. As a result, management of these companies will need to protect stakeholders against such events. This is the opinion of Kevin James, CEO of Global Carbon Exchange, a South Africa- and Australia-based consulting firm that assists business assess its global carbon ‘footprint’ and develop appropriate strategies to address its impact on the environment.
many carbon opportunities within the mining sector
The Kyoto Protocol has placed strict regulations on companies operating in both developed and developing countries around the world in an effort to curb carbon emissions. As a result mining houses that have operations on many continents are required to reduce these emissions or face large fines. James feels that the global nature of many of South African mining houses has made them more aware of the implications of such legislation. “Anglo Platinum, Harmony Gold and BHP Billiton have all reported their footprints under the CDP (carbon disclosure project), while Exxaro Coal has made mention of the fact that they want to be carbon neutral,” said James. The Carbon Disclosure Project (CDP) is an independent not-for-profit organisation which acts as an intermediary between shareholders and corporations on all climate change related issues, providing primary climate change data from the world’s largest corporations, to the global market place. JSE-listed companies such as Omnia and Sasol have already realised financial benefits from carbon related investments. Omnia has generated around R60m following the sale of credits and Sasol has banked around R100m in credits on its balance sheet in the last financial year. “There are many carbon opportunities within the mining sectors, there is no question that opportunities do exist and mining companies need to capitalise on the added stream of finance that the clean development mechanism (CDM) represents,” said James. He went on to say that mining companies to date, have not taken advantage of these opportunities. “I do believe that there will be an upsurge in this activity, particularly in the integrated industries such as smelting where energy costs and security is now becoming a factor.” Renewable energy James also believes that mining companies are beginning to approach issues around carbon emissions as more than just a social upliftment or ‘grudge’ investment.

“I believe that many of the projects that companies invest in voluntarily to offset their carbon footprints, are very exciting” he said. He points to a renewable energy as a primary example, including energy from waste materials. “It makes a lot of sense for Africa given the shortage of energy and the surplus of waste. Waste can include anything with organic matter in it, like manure, landfill, biomass, waste water. On the right scale this will solve a lot of problems.” Another opportunity that James identifies is around implementing alternative energy solutions to replace the high emission and increasingly expensive diesel generator sets that have become common place in mining activities across Africa. James concludes: “Carbon credits can play a big part in making these renewable energy projects more financially viable and sustainable.” Read more on carbon credits in the 2008 Finweek mining Green Book, which is publicly available from 13 October as a supplement with the Finweek magazine.

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