EU CBAM Threatens to Halve Value of South African Aluminium Exports

EU CBAM

Hulamin Warns of Severe Economic Hit Without Decarbonisation Measures

High Scope 2 Emissions Pose Greatest Risk Amid Transition to Green Trade Standards

South African aluminium exports to the European Union could lose over 50% of their value under the EU’s Carbon Border Adjustment Mechanism (CBAM), warns Hulamin, the country’s leading aluminium manufacturer. The policy, which begins full enforcement in 2026, targets the embedded greenhouse gas (GHG) emissions of imported goods, making energy-intensive products particularly vulnerable.

CBAM Set to Undercut South African Aluminium Pricing

Hulamin’s environmental sustainability head Hendrik de Villiers stated that South African aluminium typically carries an emissions intensity of around 18t CO₂e per tonne. With a projected levy of €80 per tonne of CO₂e, this translates to €1,440 per tonne of aluminium exported — over 50% of its market value, assuming an LME price of €2,500/t.

By 2034, CBAM will apply to both Scope 1 (direct) and Scope 2 (indirect) emissions. The latter, largely tied to South Africa’s coal-fired electricity grid, poses the most significant risk to exporters. As of 2023, the EU accounted for 35% of South Africa’s aluminium exports, highlighting the economic stakes.

Mitigation Strategies: Renewables, Carbon Tax, and Grid Reform

To reduce exposure to CBAM penalties, De Villiers proposed a multi-pronged strategy. First, aluminium producers must increase energy efficiency and integrate renewable energy into their operations. However, due to South Africa’s grid structure, this cannot be achieved without national infrastructure reform.

Second, De Villiers suggested aligning the country’s carbon tax — currently R134/t CO₂e (around $7) and targeting $30 by 2030 — with CBAM. By using the tax to fund decarbonisation, the country could both retain revenue and offset CBAM costs, as EU regulations allow for recognition of domestic carbon pricing.

CBAM’s full enforcement from January 2026 introduces a new global trade reality for emissions-heavy economies. As South Africa ranks as the 15th largest GHG emitter, and 80% of its power comes from coal, aluminium producers must adapt quickly to preserve export competitiveness in a greener global economy.