Scrap metal export ban extended for six months

21 Jun 2023

19 June 2023
Business Day
Michelle Gumede

The government has extended its temporary ban on the export of scrap and waste metal for another six months, trade, industry & competition minister Ebrahim Patel said, as it battles to curb metal infrastructure theft. In the trade policy directive dated June 15, Patel ordered the International Trade Administration Commission of SA (Itac) not to accept or process any applications for export permits for the exportation of ferrous and non-ferrous waste and scrap metal for six months.

The ban, considered a necessary means to reduce prices and - discourage syndicates from looting infrastructure, was first imposed in November 2022 as the state battled to tackle the metal infrastructure theft crisis that costs the broader economy an estimated R187bn a year. This was after the publication of a contentious draft trade policy directive in August, and public consultations that led to the cabinet approving a comprehensive package of measures to tackle the damage to public infrastructure and the economy by restricting trade in waste scrap and semi processed metals.

Iron ore miners and scrap dealers supply inputs to steel manufacturers, who convert iron ore and scrap metal into steel products for use in sectors such as construction, mining and automotive manufacturing. Railway lines, electricity pylons and road barriers are among the key infrastructure items targeted. Police minister Bheki Cele has said crime intelligence shows that most of the stolen metal is being exported amid a surge in global demand.

The ban envisioned making it harder for criminals to hold and sell stolen cable copper and scrap metal - the theft of which is rampant and driven by growing global demand for copper scrap - that contributes to power outages and leaves trains stranded. As registered buyers are allowed to purchase only from registered sellers under the regime, incidental sales of copper waste and semi-finished products, as well as sales by unregistered waste pickers will not be allowed. Similar measures are being put in place for ferrous and other metals.

Critics such as the Recycling Association of SA have denounced the six-month ban on the export of scrap metal, saying it is merely intended to boost the profits of big business. Opponents maintain waste pickers, the backbone of the recycling industry that is worth about R25bn, will be hit the hardest. Detractors have also argued that the ban is likely to be futile as criminal syndicates can easily avoid detection, and even if shipments become impossible they will keep stealing to boost their bottom line.

During the public consultation phase, the EU was among those that opposed an export ban, saying such a drastic step potentially violates provisions that govern world trade. The EU is SA's largest trading partner and its biggest source of foreign direct investment, with more than 1,000 European companies active in SA.

It said the World Trade Organization (WTO) guidelines to justify an export ban mainly include preventing or relieving critical shortages of products essential to the exporting nation. "However, the EU is not aware of evidence of there being a critical shortage of the products affected by the ban," the EU said in its submission.

The government hit back saying SA was within its rights to take steps to curb damage to public infrastructure, and it was operating entirely within the WTO framework. The other measures forming part of the multipronged strategy to curb the theft of metal infrastructure included a planned licensing system for copper trading, alongside the creation of a permit system for the export of semi-finished metal to eliminate or reduce avenues for monetizing stolen metal.