LETTER: Export duties on scrap metal should be removed now
13 November 2024 - 15:40
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I write on behalf of the Scrap Recycling Coalition. My family has been involved in scrap-metal recycling since 1903 and I was on the national executive of the Metal Recyclers Associationfor 15 years.
The price preference system (PPS) was introduced by then trade and industry minister Ebrahim Patel in 2013, ostensibly to ensure the supply of “good quality affordable scrap”. This was laughable because SA steel scrap mini-mills were already getting all the scrap they wanted for about 40% less than mini-mills overseas were paying for it, with only the scrap that was excess to their requirements being exported.
The mini-mills would take the international price paid by their foreign contemporaries for steel scrap then deduct the ocean freight, local port charges and transport from Gauteng to the coast to arrive at the deeply discounted price they then offered the big recyclers in Gauteng. This is known as export parity pricing.
The PPS discount on steel scrap forces recyclers to supply the local mini-mills at a further $50/tonne reduction and the recycler has to pay the cost of getting the scrap to them, which from Cape Town, for example, adds another cost to the recyclers of $60/tonne.
The steel mini-mills are collectively getting subsidised by R500m every month by forcing dirt cheap scrap to them and this great swindle has been going on for more than 11 years. It is important to understand that this money is coming out of the pockets of every South African — manufacturers, mines, construction companies, private individuals and the army of subsistence waste-pickers eking out a meagre living while cleaning our streets and garbage dumps of recyclables — because scrap recyclers have had to drop their buying prices in line with the PPS selling prices.
The export duty was meant to replace the PPS, but Patel decided unilaterally to keep them both, meaning that the country now sells its scrap metal at dirt cheap prices and pays taxes on scrap that is unusable and unwanted locally. Both PPS and export duty need to be removed immediately so that the productive part of the economy can stop subsidising this hopelessly inefficient little business sector.
Mark Fine Scrap Recycling Coalition
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
LETTER: Export duties on scrap metal should be removed now
I write on behalf of the Scrap Recycling Coalition. My family has been involved in scrap-metal recycling since 1903 and I was on the national executive of the Metal Recyclers Association for 15 years.
The price preference system (PPS) was introduced by then trade and industry minister Ebrahim Patel in 2013, ostensibly to ensure the supply of “good quality affordable scrap”. This was laughable because SA steel scrap mini-mills were already getting all the scrap they wanted for about 40% less than mini-mills overseas were paying for it, with only the scrap that was excess to their requirements being exported.
The mini-mills would take the international price paid by their foreign contemporaries for steel scrap then deduct the ocean freight, local port charges and transport from Gauteng to the coast to arrive at the deeply discounted price they then offered the big recyclers in Gauteng. This is known as export parity pricing.
The PPS discount on steel scrap forces recyclers to supply the local mini-mills at a further $50/tonne reduction and the recycler has to pay the cost of getting the scrap to them, which from Cape Town, for example, adds another cost to the recyclers of $60/tonne.
The steel mini-mills are collectively getting subsidised by R500m every month by forcing dirt cheap scrap to them and this great swindle has been going on for more than 11 years. It is important to understand that this money is coming out of the pockets of every South African — manufacturers, mines, construction companies, private individuals and the army of subsistence waste-pickers eking out a meagre living while cleaning our streets and garbage dumps of recyclables — because scrap recyclers have had to drop their buying prices in line with the PPS selling prices.
The export duty was meant to replace the PPS, but Patel decided unilaterally to keep them both, meaning that the country now sells its scrap metal at dirt cheap prices and pays taxes on scrap that is unusable and unwanted locally. Both PPS and export duty need to be removed immediately so that the productive part of the economy can stop subsidising this hopelessly inefficient little business sector.
Mark Fine
Scrap Recycling Coalition
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number
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