EU Carbon Border Tax CBAM, a growing concern for Africa
EU Carbon Border Tax CBAM, a growing concern for Africa

17 February 2023 – African countries could lose 30 to 35% of their exports to Europe with the introduction of the EU Carbon Border Tax (CBAM), according to a recent study. Indonesia wants to maintain its bauxite export ban, but is having growing problems finding investors for bauxite and nickel smelters. The United States is increasingly turning away from China and restructuring its supply chains.

EU CBAM is a growing concern for Africa

On the African continent, deprived of its raw materials for many hundreds of years by European colonists, concerns about the EU Carbon Border Tax CBAM are spreading. Especially in steel-producing countries such as South Africa.

Overall, according to a recently published paper for the South African government, the EU market protection measure could cause the African continent’s exports to the EU to plummet by 30 to 35%. Raw materials and intermediate products covered by CBAM, such as cement, steel and aluminium, would be particularly affected.

There are growing concerns, not only in South Africa but across the continent, that Africa could once again be left out by Europe. According to the EU CBAM draft, there will be no exceptions to the carbon border tax.

Indonesia sticks to bauxite export ban despite criticism

Indonesian Investment Minister and head of the Investment Coordination Board (BKPM) Bahlil Lahadalia said the restriction on bauxite exports will not be postponed. The export ban will come into effect as planned from June 2023.

The minister rejected criticism from the industry that there were no processing plants for bauxite in Indonesia. And that the export ban would be adhered to anyway. However, Bahlil stressed that investors with a break-even point in five years or with a high internal rate of return (IRR) would not be incentivised.

No funding for bauxite and nickel smelters?

President Joko Widodo said earlier this month that it was difficult to find funding to build a nickel and bauxite smelter. Earlier on 6 February, he called on financial services industry players in Indonesia to provide concrete support for smelter construction, citing careful calculations.

USA: Supply chains in focus

According to Deutsche Bank, US companies want to become less dependent on imports from China – this is underlined by an analysis of the US trade balance. Although the trade deficit with China is larger than with any other country at 353 billion US dollars, it only increased by around eight percent in 2022. The percentage increase with Mexico, on the other hand, was 21 percent and with Vietnam 28 percent, to 130 and 116 billion US dollars respectively. With Canada, the increase was as high as 63 per cent to 81 billion US dollars.

Latest news

Receive all the latest news once a week

Receive all the latest news once a week

Make it easy for yourself: we will remind you once a week about the latest news.

Join our mailing list to receive the latest news and updates from our team.

You have Successfully Subscribed!