Public enterprises minister Pravin Gordhan has called for a ban on the export of scrap metal, arguing that allowing such shipments is seriously damaging public infrastructure and the economy.
“It is my firm view that the export of scrap must be banned for a while. That will ensure that there is no market externally for the theft of infrastructure,” Gordhan said during an economics cluster question-and-answer session in parliament on Wednesday.
The department of trade, industry & competition is working on the issue, he said.
“The sooner we have a strong set of measures, I believe it will begin to change the face of theft of infrastructure as well,” the minister said.
Freight rail operator Transnet, partially state-owned telecom operator Telkom and power utility Eskom estimate that thieves and vandals cost them a total of R7bn a year, with the knock-on damage to the economy amounting to about R187bn annually.
The government, which is weighing various options to curb the theft of infrastructure, says surging global demand for copper scrap metal in particular is largely to blame for the spike in metal theft that threatens to cripple many parastatals and hamper economic growth. Much of the stolen metal is smuggled overseas, particularly to Asia, with syndicates often easily avoiding detection.
Gordhan said there is no doubt that “copper theft, rail theft and other infrastructure theft and vandalism is having a major and disastrous effect on the efficiency of logistics in SA”.
He said the government is working closely with law enforcement agencies to ensure that special teams are made available at appropriate points where “the metal theft projects are run to understand who is behind it”.
Controlled sales
Speaking during the same session, trade, industry & competition minister Ebrahim Patel said the government has commissioned research on what further measures can be put in place to curb metal theft. He said some industry players have made a strong case for a ban on scrap metal exports, but such measures should consider the broader effect on legitimate scrap recyclers.
“Proposals range from a complete ban on exports to controlled sales in the domestic market, and a licensing regime for merchants. These have to be evaluated. Once cabinet has reflected on that, we can come back with a final plan,” Patel said.
According to the Budget Review tabled in parliament in February, making it mandatory for all metal traders to get licences and prevent them from dealing in cash — so there is a paper trail — could be a key step in combating theft and the illegal trade in cables.
The government could also introduce rules to make it mandatory for traders to conduct due diligence on their customers and track the origin of their products.
Patel said scrap metal is a critical feedstock for manufacturing and is crucial for SA’s industrialisation drive, which has to be considered when introducing further trade curbs.
The government has in recent years introduced various measures to boost access to higher-quality and more affordable metal waste in the local market. One of the measures is an export tax on scrap metal that it says will be the most effective tool to reduce the domestic price.
No proof
The Metal Recyclers Association of SA, whose members collect and process an estimated 80% of all scrap metal in the country, recently told Business Day that banning exports will not solve the theft and vandalism of infrastructure.
“There is not a stitch of proof that theft and exports are correlated,” Donald MacKay, the association’s trade adviser, said previously.
“If anything, there is a far greater risk of copper, for example, being stolen and melted down locally than being exported. What a ban of exports will do is drive down the price of scrap, taking money out of the pockets of already destitute waste pickers and a hard-pressed manufacturing sector,” MacKay said, adding that the theft of infrastructure is a policing issue, not a trade matter.
Most recent industry figures show that about 633,000 tonnes of scrap metal amounting to R5.6bn was shipped from SA in 2019.
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