During the US Institute of Scrap Recycling Industries’ Convention and Expo, held recently in the Canadian city of Vancouver, Recycling International met up with David Loewenthal of URC, a Johannesburg-based scrap metal recycling company which processes and trades both ferrous and non-ferrous scrap. Recycling International asked him what had led the South African government to put a restriction on scrap metal exports in the first place.
Loewenthal: ‘A sector of the consuming industry lobbied the Department of Trade and Industry (DTI) through the International Trade Administration Commission of South Africa (ITAC) that restricting scrap exports via a price preference system would result in greater metal consumption, and ultimately an increase in jobs which the ANC is presently lobbying for. When it was realised that restrictions would be placed, many of the other local consumers joined in and today we have this onerous minimum 20% scrap export restriction.’
And he adds: ‘This new restrictive trade practice has now been in place for nearly two years, and not only have we seen no increase in the labour force of the consuming industry but possibly even a slight decrease. One must also bear in mind that, coupled with the current market conditions, both ferrous and non-ferrous scrap collections have decreased – which is putting a lot of pressure on the entire scrap industry. Initially, the Metal Recyclers Association (MRA) took legal action against the DTI. The MRA lost the case as the matter was not regarded as urgent. It has subsequently approached both the DTI and ITAC to try to clarify and simplify procedures, but on many occasions does not even get a response.’
According to Loewenthal, export restrictions are not the only problem for the South African recycling industry. ‘We have a huge problem with theft in our country and I believe that we should abolish VAT as well as cash payments for scrap, which will make stolen material more difficult to dispose of. South Africa also has an energy crisis which is not only affecting our consumers but even the scrap processors. It has resulted in a huge impact on all our operating costs.’
And he concludes: ‘In short, the South African scrap situation is very problematic, and until the DTI applies its mind in a manner which will promote both the scrap metal and scrap-consuming industries, the situation will only get worse.’