Recycling lobby objects to proposed ban on scrap metal exports

The proposed ban on the export of scrap metal will do little to deter infrastructure theft and will only help line the pockets of big business, an association that represents the interests of scrap metal dealers nationally says.

In its submission to the department of trade, industry & competition on the proposed ban, the Recycling Association of SA says it appears the true aim of the proposal is not to reduce theft of infrastructure but is “merely another cloaked protectionist tool and will lead to the creation of anticompetitive structures within the metal manufacturing and recycling industry.

“As far as the public are aware, scrap metal dealers are part and parcel of the problem, and the general public does not realise the extent that responsible recyclers go to to ensure they run compliant businesses that provide a positive contribution to both employment and the environment,” the association’s CEO, Nancy Strachan, said on Thursday.

In a draft trade policy directive published on August 5 — and open for public comment for 21 days — the department proposed a phased approach to curb metal infrastructure theft, which has become a huge headache for the state. As a start, it proposed that exports of ferrous and nonferrous waste and scrap metal of any kind listed in the schedule be banned for an initial period of six months from the date of publication of the final notice.  

Railway lines, electricity pylons and road barriers are among infrastructure items that are constantly targeted by syndicates, which sell to local dealers or smuggle the stolen metal to overseas markets as scrap without being detected.

Strachan said the proposal to ban exports targets legitimate, registered dealers and recyclers that are already compliant with existing legislative requirements. Creating more laws to police a compliant industry does little to address the criminality of infrastructure theft, its root causes and contributing factors, Strachan said.

She said already there are restrictions in place meant 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.

Strachan pointed out 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.

“A ban [on exports] will only serve to allow the unregistered business, illegal traders and criminal elements to further develop their networks and strengthen their abilities to remove infrastructure materials without detection, as can be seen by the outcome of the recent ban on the trade in cigarettes during the Covid-19 lockdown,” Strachan said.

She also called for the deadline of the public consultation process to be extended, highlighting that no impact analysis has been conducted to determine how many waste pickers in the informal sector will be affected and whether forcing them to change their sources of income is viable.

Strachan said the government’s push for a ban on exports is premised on research reports that factored in the inputs of a select portion of the entire industry and one specific scrap metal dealer, Reclam.

“The Recycling Association of SA and its member companies recognise the need to address the severity of the impact of infrastructure damage and/or theft and are in support of measures to address the damage and/or theft of infrastructure materials affecting SA.

“We do not support the proposed ban on the export of scrap, as we believe that the measure is extreme, based on incorrect, biased and/or flawed foundations of fact and not justified by the supporting evidence provided,” Strachan said.

Trade, industry & competition minister Ebrahim Patel told parliament this week that banning scrap metal exports should be considered urgent and necessary as it would reduce prices and discourage syndicates from looting infrastructure, which costs the broader economy an estimated R187bn a year.

He dismissed claims that the proposal to ban exports of scrap metal is a direct response to a lobby by local firms that will benefit from a reduced price of scrap metal, which will likely be due to an increase in supply in the local market.

phakathib@businesslive.co.za