ITAC scrap metal enforcement: Three companies fined for contravention of export permit conditions

08 Sep 2023

The International Trade Administration Commission of South Africa (ITAC) is vested by the International Trade Administration Act 71 of 2002 (“the ITA Act”) with the authority to issue import and export permits. Permits issued under such authority prescribe the kind, quantity, value, and other attributes of goods that can be imported into or exported from South Africa. Scrap metal and copper ingots are examples of products that are subject to permitting.

It has come to the attention of ITAC that three companies who attempted to export scrap metal and copper ingots without valid export permits, or contravened the export permit conditions issued by the International Trade Administration Commission of South Africa (ITAC), have been fined in the Durban Regional Court on Wednesday 6 September 2023.

The following three companies entered a Section 105A plea and sentence agreement:

1) Amalgamated Metal Recycling (Pty) Ltd.
2) Cayo Largo Holdings (Pty) Ltd.
3) Group Wreck International Non-Ferrous (Pty) Ltd.

All three companies admitted the allegations and counts contained in their respective charge sheets, and to a contravention of section 54(1)(b) of the ITA Act, based on the facts here-under. Each company is a licensed metal recycling merchant that collects, sorts, processes, recycles and sells recycled metal. The sale of certain scrap metals at the time of the contravention was subject to ITAC export permit control and/or the Price Preference System (“PPS”) on the exportation of scrap metal, introduced in 2013 to promote the affordable supply of scrap metal to domestic steel and other metal makers, by requiring scrap dealers to first offer scrap to the domestic consuming industry at a prescribed discount to international prices, before it can be exported to other markets.

If such recycled metal at that time could not be sold locally in terms of the PPS, a prospective seller (the accused) could apply to the ITAC for an export permit, allowing the export of the metal to foreign buyers. Furthermore, the exportation of copper and copper alloy ingots is subject to ITAC export control measures, mainly to ensure that stolen infrastructure is not smelted and exported. The respective companies applied for the requisite permits for scrap metal and ingots, after having offered such scrap on the local market and after such offers were not taken up locally. On obtaining the requisite export permits, the companies sourced a foreign buyer and sought to arrange the logistics and shipping of the scrap to give effect to the sale. The 3 companies admitted that, when the containers were entered into the Customs export stacks for exportation, the export permits were no longer valid.

All 3 companies admitted that they are guilty of contravening section 54(1)(a) and or (b), read with sections 1, 6(1)(c), 15, 26, 27, 55 and 56 of the ITA Act, as read with Government Notice R92 published in the Government Gazette 35007. Since the accused had failed to apply for new or revised permits at the time of export, the presiding officer Anand Maharaj found the respective entities guilty of contravention of the ITA Act.

All 3 companies further admitted that they benefited from the proceeds of their crime and consented to three separate Section 18 orders issued in terms of the Prevention of Organised Crime Act, 121 of 1998 (POCA).

The following Orders were made by the Court:

1. Amalgamated Metal Recycling (Pty) Ltd to pay R250 000 into the Criminal Assets Recovery Account established in terms of Section 63 of the POCA.
2. Cayo Largo Holdings (Pty) Ltd to pay R250 000 into the Criminal Assets Recovery Account.
3. Group Wreck International Non-Ferrous (Pty) Ltd to pay R1 000 000 into the Criminal Assets Recovery Account.

ITAC will continue to work with law enforcement agencies and the National Prosecution Authority to ensure that those involved in illegal exports and imports and permit abuse face the consequences of their actions.