The department of trade, industry & competition has officially called for the extension of the scrap metal export ban scheduled to come to an end in December, a move opposed by the steel industry, which says the ban contravenes World Trade Organisation (WTO) regulations.
The department says that while the ban, initially imposed in 2022, has had minimal effect in reducing copper theft it must be extended for another six months.
“Feedback received from December 2022 indicates that while incidents of the theft of copper and ferrous metal have reduced, they remain at very high levels and continue to cause considerable damage to infrastructure and to the economy,” it says in a Government Gazette.
“Based on the feedback and representations, including from those made by state-owned enterprises, consideration is being given to extending the temporary export prohibition and such temporary suspension of the operation of the PPS [price preference system] for a further period of six months.”
The purpose of the proposed semi-finished products restriction is to remove a major avenue for the export of stolen copper waste and scrap which was not sufficiently curtailed by the export controls on copper semi-finished products.
The department, which is the custodian of SA’s industrial policy, said the limitation on semi-finished copper products aims to address circumvention of the original measures and the associated huge theft and damage to public and other infrastructure, by limiting the sources of copper, which can be used to produce copper semi-finished products for export.
“The purpose of the proposed semi-finished products restriction is to remove a major avenue for the export of stolen copper waste and scrap which was not sufficiently curtailed by the export controls on copper semi-finished products,” the department said.
The International Trade Administration Commission (Itac) “has, in many instances, not been able to verify the sources of copper used in the production of semi-finished copper products and whether the copper feedstock material has been legitimately obtained or was stolen”.
The mooted extension of the ban on export of scrap metals has rubbed the steel industry up the wrong way.
President of the Steel and Engineering Industries Federation of Southern Africa (Seifsa) Elias Monage said he is concerned the department is beginning to use the export ban as an industrial policy instrument to support scrap-based mills and the country’s decarbonisation efforts.
“Seifsa’s position has always been that the scrap metal export ban is misguided in the issue that it is attempting to solve, namely infrastructure damage for scrap metal theft. It is an extremely blunt measure with unintended industrial policy consequences. More worryingly, it communicates a very poor economic signal by not taking into account a total steel perspective,” Monage said.
“If it is the intention of the [department] to introduce a new industrial policy regime, then the economic signalling should have been communicated as such and developed with industry, taking the total steel sector perspective into account.”
Cable theft is said to cost the economy an estimated R187bn a year, driven by growing global demand for copper scrap. It contributes to prolonged power outages and leaves trains stranded as railway lines, electricity pylons and street lights are among the key infrastructure items targeted.
Business Day reported last week that state-owned Transnet Freight Rail (TFR) is planning to issue a tender by December for the procurement of ammunition, including handguns and longer-range weapons, for its internal security personnel amid growing frustration over the growth of cable theft and vandalism of its infrastructure.
Marius Bennett, GM for safety and security at TFR, said this is aimed at curbing criminality and theft. Security-related incidents have cost the state-owned rail operator R3.7bn in revenue for the 2022/23 financial year.
In a separate but related process, the government is also considering imposing a requirement that registered buyers may purchase copper scrap or semi-finished copper products from only registered sellers of such products.
“The effect of this would be that all sales of scrap and semi-finished copper products will be prohibited other than between registered entities or persons,” the government said.
“While semi-finished metal products fall within the scope of application of the SHGA [Second-Hand Goods Act], buyers (and sellers) of semi-finished metal products are not currently registered. The government will thus take steps to ensure that these businesses are registered.”
Another rule change on the cards is that registration as scrap metal buyers and sellers will be granted only to businesses that have a satisfactory tax compliance status.
An input-output reporting system will be introduced that will be used both for purposes of compliance monitoring under the SHGA and for monitoring exports of scrap metal and semi-finished products.
“The reporting system will require scrap dealers to submit monthly electronic reports to Itac, showing all purchases and sales of metal products (scrap, semi-finished and finished) by volume and values,” the government said.
With Thando Maeko
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