New scrap metals policy critisised

Fresh amendments to the policy on scrap metals will not remedy long-standing viability issues in the sector since the Department of Economic Development introduced measures a year ago to curb the exports of waste metal, according to a report in Business Day. This is the view of industry players commenting on new amendments published in September.

Non-Ferrous Metal Industries Association chairman Bob Stone said the amendments did not improve the operations of firms in the sector. “In fact, they have the potential of making the situation worse for the beneficiation industry,” he said.

Existing policy allows local buyers of scrap metal such as foundries, mills, minimills and secondary scrap processors to get it at a preferential price of 20% below the international spot price that South African exporters can get for ferrous and nonferrous waste metal.


The policy will remain in place for the next five years and will be reviewed again in a year’s time.

However scrap merchants have blamed foundries for not making valid offers to purchase scrap in an effort to frustrate their exports. Foundries have meanwhile blamed merchants for finding ways to inflate the preference price.

The International Trade Administration Commission (Itac) said the new amendments “consolidate” all the amendments made to the initial policy guidelines published in August last year.

Certain definitions were added to clarify concepts such as what a valid offer entails. “As the price preference system has only been in force for one year, it is a bit early to make any conclusive judgment on its impact,” Itac said in response to questions. “The intention of the commission is to conduct an impact study a year from the latest amendment to the guidelines.”

Details of notice
One year ago the Economic Development Department introduced Guidelines for the Export of Scrap Metals providing an opportunity for local consumers to purchase scrap metal at a price below the perceived market price. This policy has had several challenges and to date very little benefit has been accrued to the metal casting industry. Notice 815 of 2014 19 September 2014 in the Government Gazette, published by the Economic Development Department International Trade Administration Commission of South Africa Export Control (Itac) states:

In September 2013, the Commission introduced a Price Preference System (PPS) pursuant to which it would not allow the exportation of scrap metal unless it had first been offered for sale to the domestic scrap consuming industry with the intention to domestically beneficiate such scrap metal. Under the PPS, exporters are required to offer scrap metal at 20% below the international benchmark price.

The Commission recommended that a review of the applicable preferential rates be conducted one year after the date of its implementation. The review aims to determine a price preference level that is sufficient to assist the metals beneficiation industries.

Interested parties are hereby invited to submit comments on the following proposed amendments to the price preference levels:

• An increase in the price preference rate for steel (including stainless steel) scrap metal from 20% to 30% below the international benchmark price;
• An increase in the price preference rate for aluminium scrap metal from 20% to 25% below the international benchmark price; and
• the existing price preference rate of 20% to remain for all other types of scrap metal.

Representations and comments had to be submitted within a period of four (4) weeks from the publication of this Notice to Mr Dumisani Mbambo at Tel: 012 394 3743 or Email; The SAIF, AFSA and other interested parties have submitted comments and the outcome is awaited. No details of when this will happen are available.