Recycling lobby chides six-month scrap metal export ban

An association representing scrap metal dealers and the recycling industry has denounced the six-month ban on the export of scrap metal, saying it is merely intended to boost the profits of big business.

Recycling Association of SA CEO Nancy Strachan said the association saw the six-month ban on copper and ferrous metals as poorly disguised as a tool to limit damage to infrastructure and designed “to enhance the already established, captured domestic steel market which is coupled with anticompetitive behaviour by both government and an exclusive club of upstream steel players”.

The ban on the export of scrap came into force last week as part of a multipronged strategy to curb the theft of metal infrastructure which is said to be costing the broader economy well in excess of R100bn a year.

The ban, opposed by a number of stakeholders including the EU, will leave many legal waste pickers without an income as scrap metal prices fall due to an increase in local supply.

The recycling industry, worth about R25bn, is crucial for mitigating the climate crisis.

“While calls to minister [Ebrahim] Patel from both the international and domestic business communities for clarifications on the rationale of banning exports have fallen on deaf ears, the legitimate traders are left to pick up the pieces of what remains of their businesses,” Strachan said.

She said while to the public it may seem, as promised by the minister, that the imposed ban was a balanced compromise between having regard to the pressing need to combat metals theft and minimising any resultant economic harm, “the reality couldn’t be further from the truth”.

The ban will hurt waste pickers, many of whom run legitimate operations. Strachan said the theft of infrastructure was more of a policing problem. Before the export ban, there were already restrictions in place to curb theft of infrastructure. But many point out these are not enforced, in part due to poor policing.

The scrap metal recycling industry has been restricted in its normal trade through the Second-Hand Goods Act, which legally requires that goods acquired be kept for seven days for police inspection.

The industry is further restrained from free trade by the price preference system introduced in 2013, prohibiting the export of scrap metal unless it has first been offered to domestic consumers at a discount to the international price at the time of sale.

Justifying the ban, trade, industry & competition minister Ebrahim Patel said last week that while there were legitimate traders, “at the same time, the theft of public infrastructure was so debilitating, so expensive to the economy and that needed to be limited immediately”.

Research commissioned by the government found the most effective way to deal with infrastructure theft was to dampen demand for scrap metal, he said.

The six-month ban would reduce prices and discourage syndicates from looting infrastructure, and allow the government the space to finalise a further set of measures to better regulate trade in scrap metal, the minister said. The government also believes the ban on the use of cash in transactions involving scrap and semi-finished metal will in future improve the traceability of transactions, as well as monitoring and enforcement.

Patel has previously rejected accusations that the export ban is meant to benefit big local industry players who will get scrap metal cheaply.

At a media briefing last week, police minister Bheki Cele said crime intelligence showed that most of the stolen metal was being exported amid a surge in global demand.