Trade, industry and competition minister Ebrahim Patel wants to ban the export of scrap metal for six months as the state battles to curb metal infrastructure theft, which threatens to cripple the economy.
In a draft trade policy directive published on Friday, which is open for public comment for 21 days, Patel said ferrous and nonferrous waste and scrap metal of any kind listed in the schedule may not be exported from SA for six months from the date of publication of the final notice.
The theft of metal, which is largely being driven by growing global demand for copper scrap, in part due to tight supplies and low inventories pushing prices to record highs, has become a huge headache for the state. Eskom’s infrastructure is being routinely targeted by thieves and saboteurs, which further limits its capacity to keep the lights on.
With high demand and ready markets for scrap, railway lines, electricity pylons and road barriers are among the infrastructure items that are targeted by syndicates, which then sell to local dealers or smuggle the stolen metal to overseas markets as scrap.
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 broader economy amounting to about R187bn annually.
In the draft notice, Patel said the ban would apply unless export permits were issued by the International Trade Administration Commission (Itac) prior to the publication of the directive; or export applications were lodged before the date of publication of the directive.
Patel also proposed that the price preference system for the exportation of ferrous and nonferrous waste and scrap metal be suspended for six months.
A price preference system was introduced in 2013, which disallowed the export of scrap metal unless it had first been offered to domestic consumers at a discount to the international price at the time of sale. The government’s long-term plan for the industry, however, has always been to have in place an export tax on scrap metal to replace the price preference system.
DA MP Mat Cuthbert said Patel’s proposal to ban exports was an admission by the government that it had failed to capacitate law enforcement authorities to combat the theft and vandalism of public infrastructure.
“Furthermore, they appear to be acting in contravention of the relevant public participation legislation as the announcement by minister in the presidency Mondli Gungubele on June 6, that public consultations pertaining to this issue were to be conducted, have not yet begun nor has a timeline for this process been made public,” Cuthbert said.
While there are illegal metal recyclers who benefit from, and are complicit in, the pillaging of public infrastructure and should be criminally prosecuted, it is patently unfair to paint everyone in the industry with the same brush, Cuthbert said.
“The fact is that there is a significant proportion of those in the industry who abide by the law and conduct legitimate business dealings. The DA reiterates that this issue is a crime problem and not a trade policy issue.
“However, it should be recorded that minister Patel has been lobbied extensively by special-interest groups in the upstream steel industry, who want an artificially low scrap price so that they are able to make obscene amounts of money at the expense of metal recyclers.”
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