For years countries have worked to impose export restrictions, duties and taxes designed to keep scrap metals at home, presumably so their domestic mills, smelters and foundries would have access to raw materials at more affordable prices.

At the beginning of August 2021 the new South African export duties on scrap metal came into effect.
However, government’s decision to extend the price preference system (PPS), which forces a discount on the local sale of scrap metal, and still introduce an export duty that was supposed to replace the system, seems to have been done in bad faith, say some.

From August 1 both restrictions will run parallel for two years. Industry and trade experts say it is unreasonable, irrational and arbitrary.

According to a Treasury document a growing number of countries have imposed export duties on raw materials in order to enable domestic industries to get them at a lower price than foreign manufacturers and capitalise on the competitive advantage on raw materials and other inputs, including labour.

Scrap metal is an important feedstock in the production of downstream metals due to the relatively lower energy consumption and its lower carbon footprint versus other metal production processes. It is widely seen as a strategic resource and many countries have scrap metal policies and regulations in place to support the development of their domestic metal producing industries.

Export taxes on scrap metals are used in a few countries, and especially amongst a few of the large BRICS countries. According to the most recent update in the OECD’s inventory of export restrictions on industrial raw materials, 32 countries have applied some form of export restriction on scrap metal (15 out of these countries make use of an export tax on scrap metal). In terms of ferrous scrap, 14 countries impose an export tax which is as high as 40%. As an example, China charges (40%), Russia (15%) and India (15%) whilst some countries impose an absolute tax per ton. In some countries duties will comprise the base rate and a specific amount per ton in US$. The value of the latter will be computed depending on the kind of metal (for non-ferrous metals) or the conversion degree of products (for ferrous metals), subject to global price dynamics.

But, in light of the current economic conditions, it seems allegations of protectionism designed to benefit domestic consumers of scrap material have been more frequent, much to the dismay of the scrap metal recycling industry.

Unfortunately, this sort of protectionism is hurtful to the scrap recycling industry, recyclers say, because the sector depends upon free and fair trade on an international scale.

Therefore, scrap metal recyclers naturally are concerned as more countries across the globe discuss or implement measures designed to restrict the export trade of scrap metals by way of various taxes, duties or other restrictions. One of the latest to do so is Malaysia.

But I say what about the thousands of components and products that are being imported from the likes of China at ridiculous prices as compared to the cost price of what is made locally. More than likely these components and products would have been manufactured from one of our base raw materials that have been exported. Surely we should be imposing more import duties?