Export permit applications for exportation of scrap metals in terms of the Price Preference System (PPS) questioned

In response to an application to the ITAC Adjudication Committee for Scrap Metal Exports for an export permit by Universal Recycling Company, MD David Loewenthal has expressed his concern with the response from ITAC and the PPS in general.

“As requested by ITAC, I have replied to their letter giving my viewpoint on the matter, trying to explain the current situation as clearly as possible. I believe it might be of interest for you to publish my letter as I think it summarises the current situation,” said David Loewenthal.

“Dear Mr. XXX: Firstly, I would like to voice my feelings with regard to your demand for a response by 15th June. We run a 75-year-old business which employs over 100 people. Over this period, we have become a world leader in the mechanical and separation of metallic scrap. We have a work force which has been with us on average in excess of 20 years. We have developed equipment which we have sold all over the world and this current export restriction is now not only damaging our business, but putting the whole metallic scrap industry in South Africa in jeopardy – an industry which is as old as civilisation, just to protect a few.”

“I have been the Chairman and Vice Chairman of the MRA for more times than I care to remember, as well as being involved in international associations, including ISRI and AFRA, and throughout my tenure in all these associations, while I have supported free trade for both imports and exports of secondary metal, I always have and still do believe that local industry must be given the right to consume secondary metal at a discount. However, not by one industry supporting another as is now the case, but by some form of government support such as either a tax rebate or a duty on imports or a tax on exports.”

“The latest restriction was promoted by the aluminium ingot producers who to date have not purchased any cheaper material that I am aware of, and neither have the rolled steel or steel foundries benefited – in my opinion, they are actually worse off. In reality, only a few – mostly copper consumers and not even beneficiators – are benefiting from this restriction.”

“Furthermore, if we look at our current economy with the state of the mining industry, our lack of power, the depreciating Rand and also the lack of technical advancement and the antiquated machinery that our consumers have remained with, these are further evidence of the futile restrictions imposed on the scrap industry.”

“I have written a letter to Mr. ZZZ regarding the minimum and maximum prices of the current preference system and do not believe that we MUST offer our material at the price preference system. This is purely a minimum price but at the end of the day, what we do have left of the free market will actually determine the price.”

“In recent times South Africa has become a consumer of used aluminium beverage cans (UBC’s). Hulamin has invested a large amount of capital to remelt them so that they can produce slabs and eventually can body stock. Universal Recycling has invested and developed equipment to process UBC’s and are currently supplying Hulamin. At our last meeting with them, they informed us that South Africa is the ONLY country that does not have a duty on the importation of can body stock while every other country which produces can body stock does have some form of a duty or a restriction.”

“Unfortunately, we have now lived with this new scrap restriction for nearly two years. Our industry is slowly contracting, and the end result will be an uneven distribution of wealth and a loss of jobs, entirely the opposite to what this was meant to create.”