South Africa’s Draft Carbon Budget Regulations mark a major step forward in climate policy, closing the loop between greenhouse gas (GHG) reporting, the Carbon Tax, and national net-zero commitments.

These draft regulations, published in 2024, move South Africa from measuring emissions to managing them, making carbon budgeting an integral part of corporate climate governance from 2026 onwards.

Who’s in Scope?

The listed activities covered by the draft regulations mirror those already listed in the GHG Reporting and Carbon Tax frameworks.   The difference lies in the threshold.

While reporting and tax thresholds are based on a facility’s design capacity, the carbon budget threshold is based on an entity’s actual average GHG emissions over the last 3-5 years.

This means that any company emitting more than 30,000 tonnes of CO₂ equivalent (tCO₂e) of direct (Scope 1) emissions per year on average will need to register as a data provider and participate in the carbon budgeting system. The threshold applies at the company (legal entity) level rather than per installation.

Coverage

The regulations distinguish between mandatory and voluntary emissions sources. . Currently, mandatory GHG emission sources include:

• Stationary combustion
• Civil aviation
• Domestic Navigation
• Fugitive Emissions
• Industrial Process and Product Use

Voluntary sources include Scope 2 and Scope 3 emissions, as well as certain Scope 1 categories such as road transport and waste, which be incorporated into later phases.

The tiered approach allows government to progressively expand the system while focusing early compliance efforts on the largest and most material emission sources.

Timelines & Compliance Cycle

The carbon budgeting programme is designed around three five-year periods:

• 2026–2030
• 2031–2035
• 2036–2040

A company’s carbon budget will be set the year before each period begins, using verified emissions data from the preceding 3–5 years.

Each year, participating entities must submit Annual Progress Reports (APRs) aligned to the national GHG reporting schedule. At least three APRs per period will need independent validation and verification.

Companies must also report on the implementation and progress of their mitigation plans, outlining how planned measures are contributing to emission reductions. These can be integrated into the APR submission to streamline compliance.

Tax Implications

The relationship between carbon budgets and the Carbon Tax Act is particularly important.

All emissions under the carbon budget remain taxable under the Carbon Tax Act and remain eligible for allowances. However, any emissions that exceed the allocated carbon budget will attract a significantly higher carbon tax rate.

In its 2023 Carbon Tax Discussion Paper, National Treasury proposed a rate of R 640 per tonne for emissions above the budget, nearly three times higher than the base rate of R 159 per tonne.

This linkage between carbon budgeting and taxation is designed to provide a strong financial signal for companies to stay within their budgets,  effectively translating environmental performance into fiscal consequence.

From Compliance to Transition Readiness

The implications for industry are substantial.
This is not just another layer of reporting; it’s the start of quantified carbon constraints for South African emitters.

For many sectors, success will depend on the ability to:

• Integrate GHG data management with financial and operational systems
• Develop credible mitigation plans aligned to the carbon budget cycle
• Prepare for independent verification of progress
• Evaluate the cost of exceeding budgets under a higher tax regime

At Digby Wells Environmental, we’re already helping clients turn these requirements into a strategic advantage, combining emissions reporting, mitigation planning, and financial exposure analysis to support long-term transition planning.

The message is clear: carbon management is no longer a compliance issue, it’s a business resilience issue.

Cultural Heritage as One Path for Mining Communities

Headframes, shafts, pits and veins. These are all terms associated with the mining industry. From the black coal dust of Middelburg to the purple haze of Kuruman; from the tailings facilities around the Witwatersrand to the name of South Africa’s currency – the Rand – mining forms an intrinsic part of South Africa’s economy. In fact, 6% of the total South African Gross Domestic Product was derived from the mining industry in 2024, generating export earnings of over US$46 billion in the same year. Nearly half a million South Africans rely directly on the mining sector for employment, with 91,000 being employed in the coal mining industry – which accounted for over a quarter of the 2023 mining revenue (Cowling, 2024; Muñoz, 2025).

Though the importance of this sector is undeniable, the minerals on which it depends are a non-renewable resource. In South Africa alone, mineral yields in 2025 declined by nearly 8% (Muñoz, 2025). While this is not necessarily a spiralling trend, it reminds us of the stark reality we will one day have to face: What do we do when our mineral reserves are depleted?

The impact of this reality has been felt across Africa. Of the ten countries with the highest mineral dependency, seven are located in Africa (UN Trade & Development, 2023). Botswana, globally the country with the highest mineral dependency, has experienced this market volatility first-hand when the country saw a decline of 50% in mining revenue in 2024, translating to an economic loss of roughly US$3 billion. In response, the government announced a strategic reduction of 16% in diamond production for 2025, launching the Diamonds and Beyond program to redirect resources towards agriculture, renewable energy, technology and tourism (Coco, 2025).

What happens though, when the case study is not a country with billions in GDP to invest and redistribute, but instead it’s a small town in the middle of the Northern Cape Province of South Africa? To answer this, we need to look back to 1914 and the story of Kimberley.

The Kimberley Model: Turning the World’s Deepest Hole into a Tourist Destination

After closing down in August 1914, the Kimberley Mine inadvertently left its host town’s economy to decline. A total of 3,000kg of diamonds had been excavated throughout the mine’s 42-year operational lifetime, leaving only a large hole, a quaint town and thousands of unemployed individuals in its wake. Many of the mine workers relocated to other diamond mines in the wider region, including Jagersfontein and the Kimberley Underground mines. Those that remained were left with limited options, as the majority of the town’s economy had been built around the mine.

With a whole mining town and the world’s deepest hole excavated by hand, these people set off to market their town. Its unique status became an attraction for tourists, and the local population capitalised on this. For roughly fifty years, people would trickle to Kimberley to view the “deepest hand-dug hole in the world”, aptly named the ‘Big Hole’. But this was not enough to sustain the economy – Kimberley required more visitors.

Innovation was required to draw tourists. In the early 1960s, efforts were made to establish a museum of curiosities to encapsulate the town’s early history. In 1965, De Beers upgraded this collection of memorabilia and injected large volumes of capital into creating a large, open-air museum including structures, dioramas, streetscapes and historic vehicles and equipment used during excavation of the Big Hole. This arguably had the desired effect and tourism boomed. In subsequent years, De Beers injected around US$3 million into upgrades of the tourist attractions, maintaining the town’s allure and, inherently, its tourism (Brown, 2004).

Kimberley’s success demonstrates that social transitioning towards cultural tourism requires a couple of key elements: continuous innovation, and a shared pride in cultural heritage.

Supporting Examples: Cullinan and Gold Reef City

The South African town of Cullinan serves as another example of successful mining-to-tourism transition. Established in 1903 as a mining town, Cullinan soon became renowned as the source of the largest diamond ever discovered. Using this as a marketing point and preserving its Edwardian architecture and historic appeal, Cullinan managed to draw thousands of tourists over the years, particularly ‘weekend tourists’ from nearby Pretoria and Johannesburg. Similar to Kimberley, consistent innovation maintained its attraction through creative additions including cultural art markets, artistic restaurants and craft shops. While the Cullinan Mine is still in operation, thousands of people flock to Cullinan every week to experience not the mine, but the cultural tourism appeal that the town has to offer.

What happens when a community lacks such unique attractions? Gold Reef City in Johannesburg provides the answer. After the discovery of a large gold reef in 1886, in the area that would later become Johannesburg, rapid expansion resulted in a booming goldmining economy during the ‘Witwatersrand Gold Rush’ (Rosenhal, 1970; The Witwatersrand Gold Rush 1886 (VC), n.d.). However, with the instability of gold trading prices in the 1970s, a large number of mines in and around Johannesburg ceased their operations.

In response to the mine closures and the immense costs of demolishing infrastructure, efforts shifted in the 1980s to preservation. Shaft No. 14, which operated from 1887 to 1971; along with the shaft tower, mine winder, headgear, the original mining houses, and steam locomotives were preserved as cultural heritage resources. A theme park was constructed around this infrastructure, incorporating the theme of the Witwatersrand Gold Rush of the 19^th century. All additional structures erected were constructed to mimic the Victorian era and, unlike Kimberley’s Big Hole or Cullinan’s record-holding diamond, Gold Reef City created tourism where there was none, based purely on the rich cultural history of the area. The park continuously adapted and innovated, adding world-class rides whilst maintaining focus on cultural heritage through museum construction and heritage tours.

Conclusion: One Path Among Many

These case studies have shown that transformation towards cultural tourism is possible for mining communities. However, it’s crucial to recognise that tourism will not be the right answer for all mining towns. Rather, these examples demonstrate one way that communities were able to sustain their existence beyond the lifespan of their mines.

The success of Kimberley, Cullinan, and Gold Reef City shouldn’t be viewed as a universal solution, but as inspiration for communities seeking alternatives. Each mining town will have unique circumstances, resources, and opportunities that may lead them down different paths – whether towards agriculture, renewable energy, technology, or other industries entirely.

What these examples do prove is that with creativity, community commitment, and strategic investment, mining towns need not face economic collapse when their minerals run out. Cultural heritage tourism offers one viable pathway, but the key lesson is broader: proactive diversification and innovation can help communities write new chapters in their stories.