Carbon Border Adjustment Mechanism forces SA miners to rethink energy strategy
By Adrian Ephraim
THE mining industry in South Africa faces a trade competitiveness challenge that operational efficiency alone cannot address.
The European Union’s Carbon Border Adjustment Mechanism came into full effect on 1 January 2026, and for SA exporters of iron, steel, and aluminium, the carbon intensity of their electricity supply is now a pricing issue, not only an environmental one.
The urgency is real, but it is not uniform across the sector,” says Liesel Kassier, Senior Business Developer at Lyra Energy, the renewable power platform.
For most operators exposed to exports, CBAM has shifted from a policy issue to a commercial issue. “The obligation can be on the EU importer, but the pressure flows back through pricing, procurement requirements, emissions disclosure, and product qualification,” Kassier says.
The numbers behind that pressure are bleak. South Africa’s carbon intensity of its iron and steel production is 0.91 kgCO2e per dollar of output compared to an EU average of only 0.16 kgCO2e. That gap, driven by SA’s coal-heavy grid, process emissions and logistics, cannot be closed overnight.
But Kassier says it’s not a matter of whether the entire gap can be closed quickly, but which parts of the emissions profile a mining operation can credibly cut during the next procurement cycle. “The clearest lever we have right now,” she says, “is electricity.”
“Electricity is a material share of Scope 1 and Scope 2 emissions for most South African mining operations, and unlike process emissions, it can be addressed through procurement decisions in the short to medium term. Renewable energy won’t solve every embedded-emissions challenge across the value chain, but it is one of the fastest and most bankable interventions available to miners today.”
This is exactly the market Lyra Energy is building for. The platform aggregates renewable generation from large-scale projects and sells contracted power to commercial and industrial offtakers via PPAs, making utility-scale clean energy available to businesses without the balance sheet or scale to develop their own generation assets.
In March 2026, Lyra reached financial close on the 255 MW Thakadu solar project in the North West province, one of the largest privately contracted renewable energy developments in the country, with a total capex of R4 billion and Standard Bank as senior lender. Work on phase one is in progress, with commercial operations planned for the first half of 2027.
Operational reality for mining clients is the starting point, not carbon accounting, Kassier is adamant. “A mine needs more than renewable megawatt hours. It needs a power solution that fits its production profile, risk appetite and continuity needs.”
Battery storage, she explains, comes into play where it addresses a real operational issue, smoothing out variability, moving generation into peak demand periods, and reducing exposure to grid instability, not merely to improve the optics of a decarbonisation plan.
Kassier is clear on the question of whether Eskom’s improved supply reliability in 2025 and 2026 reduces the need for private power. “The private power case was never just about load-shedding. The trajectory of tariffs is still a structural pressure, despite improved supply stability. A long-term PPA protects industrial users from that path.”
NERSA-approved Eskom increases have consistently exceeded inflation across successive MYPD cycles. For a capital-intensive mining operation with a 15 to 20-year planning horizon, that trajectory is as important as today’s supply reliability.
Perhaps the most important signal in Kassier’s responses is what is already happening outside the sectors formally covered by CBAM. PGM producers, manganese miners, and chrome exporters are not waiting for regulatory expansion. “Regulation isn’t the only pressure. The most immediate pressure for PGM producers comes from downstream customers, notably European automotive OEMs, who are already setting scope 3 procurement requirements,” she says.
For those in manganese and chrome, the exposure comes via stainless and alloy steel buyers who are now also in the definitive phase of CBAM. “Companies that move early on Scope 2 will be better positioned when the scope of carbon related trade measures expands and better positioned in the meantime to defend their export pricing in increasingly carbon sensitive markets,” Kassier says.
SA’s mining sector now has the energy transition as a trade strategy. The price of delay is no longer a theoretical issue.
