ArcelorMittal South Africa: CBAM Exposure and Compliance Pathway

ArcelorMittal South Africa and CBAM

ArcelorMittal South Africa (AMSA) is the country's largest integrated steel producer, operating blast furnace-based steelmaking at Vanderbijlpark (Gauteng) and Newcastle (KwaZulu-Natal). As a producer of flat and long steel products, AMSA has direct exposure to CBAM for any products exported to the European Union.

AMSA's Production Profile

AMSA operates two major integrated steelmaking complexes:

Vanderbijlpark Works

• Production method: Basic Oxygen Furnace (BOF) steelmaking
• Products: Hot-rolled coil, cold-rolled coil, coated products, plate
• Capacity: ~2.5 Mt/year (crude steel)
• Primary markets: Domestic SA, Sub-Saharan Africa, some EU exports

Newcastle Works

• Production method: Basic Oxygen Furnace (BOF) steelmaking
• Products: Long steel products (sections, rails, wire rod)
• Capacity: ~0.7 Mt/year (crude steel)
• Primary markets: Domestic SA, Sub-Saharan Africa

CBAM Exposure Analysis

BOF steelmaking is inherently carbon-intensive, with typical embedded emissions of 1.8–2.2 tCO₂/t for crude steel production. This is close to the EU default value of 2.18 tCO₂/t (with 10% markup), meaning that AMSA's actual emissions may be near the default — making the choice between actual and default values less financially significant than for ferrochrome producers.

However, AMSA's specific CBAM exposure depends on:

1. Which products are exported to the EU — only EU-bound shipments face CBAM
2. The carbon intensity of specific product lines — downstream processing adds emissions
3. Eskom grid intensity — electricity used in downstream processing adds Scope 2 emissions

The Eskom Electricity Problem

Like all South African steel producers, AMSA uses Eskom grid electricity for downstream processing (cold rolling, coating, finishing). At Eskom's grid intensity of ~0.95 tCO₂/MWh, this adds meaningful Scope 2 emissions to finished product carbon footprints.

For cold-rolled coil production (which requires approximately 0.15–0.20 MWh/t of additional electricity beyond hot rolling), the Scope 2 addition is approximately 0.14–0.19 tCO₂/t — a meaningful increment on top of the BOF process emissions.

Compliance Pathway for AMSA

Short-term (2026–2027):

• Quantify EU export volumes by CN code
• Engage EU importers to confirm Authorised CBAM Declarant registration
• Decide on emission methodology (default vs. actual)
• Budget CBAM certificate costs into EU pricing

Medium-term (2027–2030):

• Invest in renewable energy PPAs to reduce Scope 2 emissions
• Explore hydrogen-based steelmaking (DRI/EAF route) as a long-term decarbonisation pathway
• Engage with the SA government on CBAM adjustment mechanisms

The SA Carbon Tax Interaction

South Africa's Carbon Tax Act imposes a carbon price on domestic emissions. AMSA pays carbon tax on its production emissions. The EU CBAM regulation includes provisions to avoid double-counting of carbon costs — if a carbon price has been paid in the country of origin, this can be deducted from the CBAM liability.

However, the SA Carbon Tax rate (currently R190/tCO₂ or approximately €9/tCO₂) is significantly lower than the EU ETS price (€65/tCO₂), meaning the deduction only partially offsets the CBAM liability.

Use the Calculator

Model AMSA's CBAM exposure using the CBAM Calculator [blocked] by entering your specific EU export tonnage and selecting the steel sector.