NATIONAL POLICY ON CLIMATE CHANGE Mining Industry Response

Background The Chamber recognises that anthropogenic factors contribute to climate change At a global and local level there is recognition that meaningful action is required At a global level :  The challenge is the absence of a global agreement – any “first mover” country runs the risk of significantly undermining the competitiveness of its carbon intensive trade exposed industries;  In RSA’s case, the Pareto Principle applies: a small emitter like RSA, can make large domestic progress and decimate its industry, but its action can be dwarfed by the inaction of large emitters, eg USA/China/India

Background cont…. Advanced nations, whose economies are now mostly service based have already industrialised and have the most scope to reduce emissions Locally, RSA to address poverty and joblessness, still have: –Significant industrialisation and urbanisation processes ahead, which requires significant energy and a larger CO2 emissions –Access to modern and reliable energy services, like electricity, has a profound impact on human capital development and economic growth –Therefore any climate change policy development must be sensitive to RSA’s developmental needs.

Mining and Minerals Complex – Essential Core of Economy Backbone of RSA’s economy; –Creates direct jobs ( indirect) –Accounts for about 8% of GDP (18% with multiplier effect) –Critical earner of foreign exchange> 50% –Accounts for 18% of investment (9% direct) –50% of volume of Transnet rail and ports Government recognize mining, (+ manufacturing and agriculture) as the sectors with the potential to create employment for semi-skilled workforce –New Growth Plan –Industrial policy Action Plan –Mining Growth Strategy –Beneficiation

The Chamber of Mines has overtime being directly involved in both the international & local climate change discussions. This involvement has been through quite a number of vehicles i.e as part of a business collective participating in the national initiatives such as the NCCC through BUSA. Ministerial round-table on the 17 May 2010 which the Chamber also attended, set a clear signal to all South Africans about government’s intentions to develop policy to address climate change. The Chamber of Mines, as part of industry, therefore welcomes the opportunity to comment on the White Paper on climate change.

Climate Change Policy, broad issues The White Paper has appreciably improved from the green paper in that it has toned down on being prescriptive and has provided for a collective approach e.g the development of a National Carbon Budget (NCB). The policy appreciates inter alia the transformational requirement of the economy to a low carbon economy especially on industries such as mining that are heavily reliant on coal-based energy. Whilst this strategic objective of the policy is appreciated, it is critical that this transition is managed with the utmost caution. A shortage or quick switch to other forms of energy sources might result in un-intended consequence on the economy e.g. job losses, business closing down, etc as evidence from the recent shortage in electricity

Climate Change Policy, issues of concern The FRIDGE study “To Provide An Overview Of The Use Of Economic Instruments And Develop Sectoral Plans To Mitigate The Effects Of Climate Change” has identified the mining industry as one of the most Trade Exposed sectors due to our energy intensive goods and a potential climate ‘unfriendly’ foreign policy The policy also highlights “risk reduction and management” as one of the key priorities. In the FRIDGE study the mining industry was identified as high-risk (i.e. very limited options) in terms of implementing mitigations measures Therefore, it is imperative that sector driven/based customised mechanisms are developed to mitigate sector emissions and also to ‘cushion’ the possible economic impacts on vulnerable industries.

Climate Change Policy, issues of concern ‘Un-clear’/agreed national emissions baseline National GHG inventory recently updated, begun to address some of the industry concerns on the 34%/2020 and 42%/2025 emissions reductions baseline. This recent inventory has been ‘fully’ consultative and has a broad support from industry The published discussion document on the “Peak, Plateau, and Decline” concept as a ‘back-bone’ of a national reduction profile has to be concluded so that there is a national consensus on a baseline and the various emissions reduction phases. Subsequent to the DEA consultation with business, after the conclusion of inputs on green paper, it was understood that the White Paper will not include numbers, however, this is included in section 6.4 of the policy. The conclusion on the Peak, Plateau, and Decline discussions would have provided a much better consulted and appreciation of the mitigation efforts (per sector) and a smooth development of the NCB

Climate Change Policy, issues of concern The Chamber of Mines is still unclear and concerned around the synergy and hence the implementation of CC policy with other related policies It is not clear how the tax base, threshold or even the rate will be developed and how this will relate to the NCB - Carbon Tax Beneficiation Strategy New Growth Path IRP2

Conclusions The White Paper should be based on a consensus on Peak, Plateua, and Decline Recently updated National GHG inventory should form the baseline of SA’s reduction targets CC policy to be aligned with other government policy imperatives –Job Creation –Beneficiation strategy Development of the sectoral emission reductions plans, taking into cognisance the economic implications

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