Tuesday, August 24, 2010

President Zuma on Trade Visit To China

South African President Jacob Zuma, right, is seeking to boost trade on a trip to China this week. South Africa aims to tap trade and investment in "BRIC" economies Brazil, Russia, India and China.

For Beijing, the visit by Zuma will be an opportunity to consolidate ties with African countries, where China is increasingly turning for resources, markets and diplomatic support. Late last year, Chinese Premier Wen Jiabao offered Africa $10-billion in concessional loans over three years.

Many ANC officials are starting to see the fast growth of China and other BRIC economies as proof that the state should be doing more to nurture growth -- a departure from the free-market orthodoxy that has prevailed since the end of apartheid in 1994. While Zuma is in Beijing, China and South Africa are expected to sign agreements that will include cooperation on mineral resources and transport, and to address lopsided bilateral trade flows.

China is South Africa's largest trading partner, but last year South Africa ran a $2.7-billion trade deficit with China. A Comprehensive Strategic Partnership Agreement that Zuma will sign is expected to address that. This agreement is expected to deal with the trade imbalance between the two countries and with the fact that South Africa still exports raw materials to China while importing finished products into our market. (Engineering News, 8/23/2010)

Sasol's China CTL Deal: Application Review Almost Complete

Sasol expects China’s National Development and Reform Commission to conclude a review of its application to build a 90 000-bl/d coal-to-liquids (CTL) facility in that country. Sasol entered into a 50:50 venture with Shenhua Ningxia to develop the $10-billion project, which is said to be the largest foreign single project direct investment in China and also the country's largest-ever CTL fuels project. China's National Energy Administration has appointed Chinese International Engineering Consultative Company (CIECC) to arrange a panel of experts to facilitate a review of the ‘project application report.'

The CTL plant would be Sasol's first CTL investment outside South Africa, where the technology is used to produce about 40% of the country's fuel. President Jacob Zuma traveled to China on Monday for the State visit. Zuma will visit Shanghai to view the South African Pavilion at the Shanghai 2010 World Expo. The expo was opened on May 1, and will continue until October 31. (Engineering News, 8/23/2010)

Tuesday, August 3, 2010

Treasury Considering Carbon Tax on Coal

According to industry sources, the Treasury is considering a proposal to introduce a carbon tax at source, probably of about R100 per ton. Coal companies would be taxed on the coal they deliver to Eskom, which emits the largest amount of greenhouse gases, although Eskom itself would not pay the tax. But a carbon tax of R100-R200 a ton could cause a 1 percent decline in gross domestic product in the first six years. SA has undertaken to reduce its greenhouse gas emissions 34 percent by 2020 and 42 percent by 2025.

Eskom would face higher prices for coal, forcing it to look for more carbon-efficient ways to generate electricity or it would pass the cost on to the consumer. It would also result in less incentive for Eskom to invest in technology such as carbon capture and storage. Ultimately, demand for fossil fuel would drop.

A tax of R100 a ton could generate about R45-billion in tax revenue as the country generates about 450-million tons of greenhouse gases a year. But around R650-billion in tax revenue was collected last year, so the proposed carbon tax represents a substantial additional burden and would be inflationary. (IAAfrica, 8/3/2010)