The South African government has outlined plans to regulate the scrap metal industry, which has over the years caused South Africa’s key economic infrastructure to be vandalised, necessitating billions of rand in repairs. The Department of Trade, Industry & Competition has previously said that the theft of public infrastructure for resale as scrap costs R47 billion in damage annually to the economy.

In a bid to address this, the government in a gazette published recently said it aimed to compel sellers of scrap and waste metal to be registered and tax-compliant to curtail illicit flow of goods in the industry.

The government is also proposing to beef up reporting in the industry by introducing an input-output system that will be used both for purposes of compliance monitoring under the act and for monitoring exports of scrap and waste metal and semi-finished products.

The state said this would require scrap and waste dealers (buyers and sellers) to submit monthly electronic reports via the Metal Trading System to the International Trade Administration Commission.

Scrap metal theft, in particular copper cable, is hurting South Africa’s infrastructure

It said this system would reveal all purchases and sales of metal products (scrap, waste, semi-finished and finished) by volume and value. However, this proposal has not gone down well with industry players. Donald MacKay, CEO of XA Global Trade Advisors, said the electronic system proposed fell short of the required standards.

Enhanced reporting requirements
In Government Notice No. R. 2801 published in the Government Gazette No. 47627 dated 30 November 2022, the Minister of Trade, Industry and Competition (Trade Minister) published the Policy Implementation Actions on Measures to Restrict and Regulate Trade in Ferrous and Non-Ferrous Metals Waste, Scrap and Semi-Finished Ferrous and Non-Ferrous Metal Products to Limit Damage to Infrastructure and the Economy (Policy).

In the Policy, the Trade Minister set out various interventions which are to be implemented in what may broadly be described as a three-phased approach and proposed that the enhancement of the regulation of the scrap and waste metal trade through amendments to the Regulations published under the Second-Hand Goods Act, (Act No. 6 of 2009) (SHGA), which will bolster the applicable metal trading registration regime, be implemented as part of Phase 2.

The following changes are being considered to the Regulations published under the SHGA:

1. Enforcement of the registration regime for scrap and waste metal sellers
While the SHGA contemplates that both buyers and sellers of scrap and waste metal are required to be registered, this requirement is currently being enforced against buyers but not sellers. Going forward, the Government intends to enforce the requirement that scrap and waste metal sellers are subject to the registration regime envisaged in the SHGA. It is envisaged that a registration exemption will apply in relation to waste pickers (but not in relation to copper scrap and waste metal).

2. Enhanced registration requirements
Registration as scrap and waste metal buyers and sellers will only be granted to businesses that have a satisfactory Tax Compliance Status.

3. Enhanced reporting requirements
An input-output reporting system will be introduced that will be used both for purposes of compliance monitoring under the SHGA and for monitoring exports of scrap and waste metal and semi-finished products. The reporting system will require scrap and waste dealers (buyers and sellers) to submit monthly electronic reports, via the Metal Trading System, to the International Trade Administration Commission (ITAC), showing all purchases and sales of metal products (scrap, waste, semi-finished and finished) by volume and value. The reports will inter alia contain the following information.
(i) Acquisition table
Each row of the table will show a different purchase. The row will show a) the date of purchase, b) the type of metal purchased, c) the grade of metal purchased, d) the tonnage purchased, e) the total cost of the purchase, f) the business registration number of the seller, or in the case of an individual seller, the identity number of the individual, and g) any additional fields that may be required to secure the objective of input- output reporting.
(ii) Disposal table
Each row of the table will show a different sale. The row will show a) the date of sale, b) the type of metal sold, c) the grade of metal sold, d) the tonnage sold, e) the total revenue of the sale, f) the business registration number of the buyer, g) in the case of an export sale, the Unique Consignment Reference (UCR), and h) any additional fields that may be required to secure the objective of input-output reporting.
4. Inclusion of semi-finished metals in the registration regime
While semi-finished metal products fall within the scope of application of the SHGA, buyers (and sellers) of semi-finished metal products are not currently registered. The Government will thus take steps to ensure that these businesses are registered.
5. Requirement for registered buyers to only purchase copper scrap, waste, semi-finished, and finished copper products from registered sellers.
(i) The Government is also considering imposing a requirement that registered buyers may only purchase copper scrap, waste, semi-finished, finished copper products from registered sellers of such products. The effect of this would be that all sales of scrap, waste, semi-finished and finished copper products will be prohibited other than between registered entities or persons.

In order to give effect to the Policy, the Minister of Police publishes, in the Schedule, draft regulations amending the Regulations for Dealers and Recyclers, 2012, in terms of section 41(1) of the Second-Hand Goods Act, 2009 (Act No. 6 of 2009), for public comment. Interested persons can also visit the website of the Civilian Secretariat for Police Service at http://www.policesecretariat.gov.za for a copy of the draft Regulations.

Members of the public and interested/affected parties are invited to submit their written representations and comments regarding the Draft Regulations within a period of thirty (30) days from date of publication by:
(i) Emailing comments to: Milton.Ntwana@csp.gov.za, (ii) Posting comments to:
Civilian Secretariat for Police Service, Private Bag X 922, Pretoria, 0001, For the attention of: Mr Milton Ntwana.

Any enquiries related to the publication may be directed to Colonel G Pretorius at PretoriusG@saps.gov.za.

Scrap metal theft is hurting South Africa’s infrastructure
Various crucial entities in South Africa have been severely hampered by the theft of metal. As an example, state-owned power utility Eskom is phasing out the use of copper cables due to high levels of theft of the item.

According to a report by the Global Initiative Against Transnational Organised Crime (GI-TOC), stolen copper cables, overhead lines, copper used in conductors, and copper stored for later use cost Eskom between R5 billion and R7 billion a year, plus about R2 billion to replace them.