Industry does not think much about ministers’ call that government should consider a temporary ban on the export of scrap metal

SA Metal Group Director Graham Barnett disagrees with the government ministers.

Transport minister Fikile Mbalula has echoed the call made by Cabinet colleague and Public Enterprises Minister Pravin Gordhan, who said in Parliament that to alleviate the risk of continued damage, theft and vandalism of freight rail infrastructure, the government should consider a temporary ban on the sale of scrap metal.

As metal theft worsens, transport minister Fikile Mbalula says government efforts to boost security and protect critical rail infrastructure from thieves and vandals are gaining traction.

The theft of metal, which is in part driven by a surging global demand for copper scrap largely due to tight supplies and low inventories pushing prices to record highs, has become a huge headache for the state and a serious threat to economic recovery.

Mbalula has called for a ban on the export of scrap metal as the theft and vandalism of critical rail infrastructure is sabotage on the country’s economy.

“We are unequivocal in our call to ban the export of scrap metal and will support any measure that will bring us closer to this reality.”

The SA Metal Group in Cape Town have invested heavily in beneficiation processes. This includes a 1 000kW Inductotherm VIPTM Power Supply Unit in the melting department

Addressing a media briefing on the White Paper on the National Rail Policy in Pretoria, he said taking this step will reinforce government’s interventions aimed at protecting public assets and making the theft of cables and other metals less lucrative.

“The criminality behind the rampant theft and vandalism of railway infrastructure that has stripped bare our stations and rail network requires extraordinary interventions that go beyond merely stepping up security.”

“We must eliminate this perverse incentive by banning the export of scrap metal and therefore limit the market that aids this criminality. The corporate sector must come to the party and bolster our efforts to deal a decisive blow to this criminality that is enabled by scrap dealers buying stolen scrap metal,” said Mbalula.

Mbalula noted that South Africa’s public transport infrastructure was in a major state of disrepair because of theft and vandalism that had crippled the DoT’s rail recovery interventions.

“It is for that reason we call this kind of criminality economic sabotage, which must attract the harshest penalty permissible by law. We have equally called for the ban of scrap metal exports which provide a perverse incentive for this criminality. We remain ready to work with the Minister of Trade, Industry and Competition to ensure that such a ban becomes a reality.”

With high demand and ready markets for scrap, railway lines, electricity pylons and road barriers are among the infrastructure items that are targeted by syndicates, which then sell to local dealers or smuggle the stolen metal to overseas markets as scrap.

Freight rail operator Transnet, partially state-owned telecom operator Telkom and power utility Eskom estimate that thieves and vandals cost them a total of R7 billion a year, with the knock-on damage to the broader economy amounting to about R187 billion annually.

In July 2020 the government banned all exports of ferrous and non-ferrous scrap metal for two months. At the time, this move was taken to safeguard domestic supply while it considered measures to support the domestic industry.

SA Metal Group Director Graham Barnett disagrees with the government ministers
In an interview with the Cape Argus newspaper SA Metal Group Director Graham Barnett disagreed with the government ministers and said a ban on the selling of scrap metal would result in steel mills, foundries, copper mills, aluminium mills and other factories which use scrap metal to manufacture products for the domestic and export markets having to cease operations.

SA Metal Group is South Africa’s oldest and largest metal recycling company with scrapyards in and around Cape Town, Johannesburg and Pretoria.

He said scrap metal recycling companies that supply such factories would also have to close down.

SA Copperworks, a division of the SA Metal Group, now manufactures a wide range of high-conductivity rectangular, square and round copper busbars, coiled copper rods and strip, paper-covered copper strip for the transformer industry, round and hexagonal solid and hollow brass bars, and solid square brass bars, as well as other profiles on request

“Many types of metal products, such as steel bars, steel wire, aluminium window frames, copper conductors and brass valves, would no longer be able to be manufactured in South Africa and instead would have to be imported.”

Barnett said a ban would lead to hundreds of thousands of jobs in the formal sector being lost and scrap metal collecting would no longer be a source of income for the hundreds of thousands of informal collectors who currently make a living from this trade.

Cape Town Mayco member for safety and security JP Smith said there had been several comments made by various national government representatives recently, around potential restrictions on the scrap metal trade. He said the City would welcome efforts to curb the rampant cable theft and vandalism of critical infrastructure, but these would need to be expedited.

“However, it is imperative that such efforts be effective and that whatever regulations are imposed, or legislative changes made, be enforced with vigour by the criminal justice system.”

He said in the interim, the City, through its enforcement agencies, and the Metal Theft Unit (MTU) in particular, continues to do everything possible within its mandate to address theft and vandalism of infrastructure.

Smith said that in the first three months of this year, the MTU arrested 54 suspects, issued just over 2 000 fines, and recovered hundreds of kilograms of infrastructure belonging to the City, Eskom, Telkom and other entities. In addition, they conducted 561 inspections at scrapyards, during which they issued 95 warning notices and closed 29 facilities.

Following a similar call by the minister in February, support came from commercial farmers union TLU SA, who said they hoped he would ensure it was not just stolen Prasa material that comes under scrutiny.

TLU SA’s local government committee chairperson Erika Helm said: “This is not just a Prasa problem. This is a challenge for every business, including agriculture.” She said the government should strongly address the trade in stolen goods.

Farmer Bertus van der Westhuizen called for a particular focus on scrap dealers trading in copper and aluminium. He said tractors and harvesters’ radiators and wiring harnesses were stripped at a tremendous rate for the copper.