CBAM and Aluminium: SA Smelters and the EU Carbon Border

Aluminium has the highest embedded carbon intensity of any CBAM-covered sector. South African aluminium smelters face significant CBAM liabilities due to the country's coal-dominated electricity grid.

Published April 2026·Last updated April 2026·carbonborderadjustment.co.za

CBAM and Aluminium: SA Smelters and the EU Carbon Border

Aluminium has the highest embedded carbon intensity of any CBAM-covered sector, making it the most financially exposed category for South African exporters. The combination of electricity-intensive smelting and South Africa's coal-dominated electricity grid creates a significant CBAM liability for SA aluminium producers.

South Africa's Aluminium Industry

South Africa's primary aluminium production is concentrated at two major smelters in Richards Bay, KwaZulu-Natal:

▸Hillside Aluminium (South32) — 720,000 tonnes per year capacity
▸Bayside Aluminium (South32) — 170,000 tonnes per year capacity (currently on care and maintenance)

These operations are among the largest electricity consumers in South Africa, drawing power from Eskom's coal-fired grid at an emission factor of approximately 0.9 kgCO₂/kWh.

The Carbon Intensity Challenge

Primary aluminium smelting requires approximately 14–16 MWh of electricity per tonne of aluminium produced. At South Africa's grid emission factor, this translates to:

15 MWh/t × 0.9 kgCO₂/kWh = 13.5 tCO₂/tonne (electricity only)

Adding process emissions (primarily from the Hall-Héroult electrolysis process), the total embedded carbon intensity of SA primary aluminium is approximately 12.4–14 tCO₂/tonne — significantly above the EU default of 12.4 tCO₂/tonne.

CBAM Liability Calculation

Example for a SA aluminium exporter:

| Parameter | Value | |-----------|-------| | Annual EU export volume | 100,000 tonnes | | Embedded carbon (default) | 12.4 tCO₂/tonne | | Total embedded emissions | 1,240,000 tCO₂ | | EU ETS price | EUR 65.42/tCO₂ | | Gross CBAM liability | EUR 81,120,800 |

This is a substantial financial exposure — equivalent to approximately ZAR 1,662,976,400 at current exchange rates.

Decarbonisation as a Competitive Strategy

For SA aluminium producers, reducing embedded carbon is not just a compliance exercise — it is a competitive imperative. Aluminium producers in countries with clean electricity grids (Iceland, Norway, Canada) already have a significant cost advantage under CBAM.

Key decarbonisation strategies:

▸Renewable electricity PPAs — South Africa's solar and wind resources are among the best in the world. A dedicated renewable PPA could reduce embedded carbon by 60–70%
▸Inert anode technology — Next-generation smelting technology that eliminates process CO₂ emissions from electrolysis
▸Recycled aluminium integration — Secondary aluminium has approximately 95% lower embedded carbon than primary

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Frequently Asked Questions

Why does aluminium have such high CBAM exposure?

Aluminium smelting is extremely electricity-intensive, consuming approximately 14–16 MWh per tonne of primary aluminium. In South Africa, where electricity is predominantly coal-fired, this translates to a very high embedded carbon intensity of approximately 12.4 tCO₂/tonne.

Which SA aluminium producers are affected by CBAM?

South32's Hillside Aluminium (Richards Bay) and Bayside Aluminium (Richards Bay) are South Africa's primary aluminium smelters. Both export significant volumes to EU markets and are directly affected by CBAM.

What is the EU default emission factor for aluminium?

The EU default embedded carbon factor for primary aluminium is 12.4 tCO₂/tonne. This reflects the global average carbon intensity of aluminium smelting, but SA producers may have higher actual intensities due to the coal-heavy grid.

How can SA aluminium producers reduce their CBAM liability?

The most impactful strategy is switching to renewable electricity through power purchase agreements (PPAs). South Africa's abundant solar and wind resources make this increasingly viable. A switch to 100% renewable electricity could reduce embedded carbon by approximately 70%.

Is recycled aluminium subject to CBAM?

Secondary aluminium (produced from recycled scrap) has significantly lower embedded carbon than primary aluminium. CBAM applies to the actual embedded emissions, so secondary aluminium producers typically face much lower CBAM liabilities.

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