This is despite the submission from the Metal Recyclers Association (MRA) requesting that the Minister reject the recommendation to extend the PPS while the export duties are in place.
Ebrahim Patel Minister of Trade, Industry and Competition has announced through a statement in Government Gazette No. 44758 of 28 July 2021 that the policy directive on the exportation of ferrous and non-ferrous waste and scrap metal extended for two years.
“By virtue of the powers vested in me in terms of section 5 of the International Trade Administration Act, 2002 (Act No. 71 of 2002), I, Ebrahim Patel, Minister of Trade, Industry and Competition hereby notify as follows:
a) On 10 May 2013 the Minister of Economic Development (the Minister) issued a Trade Policy Directive to the International Trade Administration Commission of South Africa (ITAC) in terms of section 5 of the International Trade Administration Act No. 71 of 2002 on the exportation of ferrous and non-ferrous waste and scrap metal and subsequently reviewed and extended the Policy Directive
b) On the 17 December 2020 in Government Gazette No. 44008, the Minister extended the Policy Directive for a further period of 7 months until 31 July 2021 to allow for work by the South African Revenue Service (SARS) to bring the export tax on ferrous and non-ferrous waste and scrap metal into operation in terms of any applicable taxation law and consideration by the department and ITAC on which aspects, if any, of the Policy Directive may be continued in order to complement and support the operation of the export tax on ferrous and non-ferrous waste and scrap metal
c) On 9 February 2021, industry stakeholders adopted the Steel and Metal Fabrication Masterplan 1.0 (the “Masterplan”). The Masterplan provides a blueprint for growth and renewal in the steel and metal fabrication industry. As part of the Masterplan, a working group on scrap metal, involving key stakeholders from across the industry, was established to determine which, if any or all, of the Policy Directive should remain following the commencement by SARS of the export tax on ferrous and non-ferrous waste and scrap metal. The working group has recommended to the Minister that the Policy Directive be extended for a further long-term period to provide policy certainty for the downstream beneficiation industry
d) In Government Gazette No. 44758 of 24 June 2021 stakeholders and interested parties were invited to submit representations and comments regarding the proposed extension of the Policy Directive from 31 July 2021 until 31 July 2023 following the recommendation from the working group on scrap metal taking into account the recently adopted Masterplan for the steel industry
e) Following consideration of the matter, the aim of the Masterplan for growth and renewal of the steel and metal fabrication industry and comments received, I hereby extend the Policy Directive issued to ITAC in terms of section 5 of the International Trade Administration Act, 2002 for a period of two years from 31 July 2021 to 31 July 2023.”
MRA’s response to the proposal to extend the Price Preference System (“PPS”) on ferrous and non-ferrous scrap metal for a further two years
On 8 July 2021 the Metal Recyclers Association submitted a long and detailed submission to Dr Umeesha Naidoo, Director: Primary Minerals Processing, Department of Trade, Industry and Competition outlining why the proposal to extend the Price Preference System (“PPS”) on ferrous and non-ferrous scrap metal for a further two years should not be implemented.
In its introduction the MRA says: “Any decision by the Minister of Trade Industry and Competition (“The Minister” to extend the PPS on ferrous and non-ferrous scrap metal, in conjunction with export duties on these materials, is unreasonable, irrational and arbitrary. Any such decision is legally challengeable.”
The MRA then documents many reasons and concludes with:
1. The proposed extension of PPS for another 2 years is based on the recommendation of an anonymous working group, who are either working with incorrect and/or incomplete information or who have the requisite information and are choosing to withhold this from the Minister. Any decision which flows from this compromised recommendation is by its nature irrational as soon as the Minister becomes aware of the compromised status of the recommendation. Following this submission, we believe the Minister is now aware of the problems with the recommendation and should consequently reject the recommendation
2. The MRA requested a seat on the Council and this request was denied or ignored. The errors made in the Masterplan and the consequent recommendation of the working group, were thus completely avoidable if the reasonable request for representation by the recycling sector had been acceded to
3. It remains unclear how the decision was taken about who is entitled to access to information, with potentially negative impacts for the competitive landscape in the recycling sector. The MRA is taking advice on whether or not to raise this concern with the Competition Commission
4. The last minute change of mind regarding replacing PPS with export duties to maintaining PPS along with export duties appears to show a lack of good faith. It seems apparent that the DTIC and the Minister knew about this possibility in February 2021, yet waited until a month before the implementation of the export duties before publishing the recommendation for comment. If there was any intention to meaningfully canvas interested parties for their input, this could have been done as soon as the recommendation was made by the working group and the responses could have been accounted for in the final version of the Masterplan.
To read the full submission visit https://mra.co.za/wp-content/uploads/2021/07/2021-07-08-MRA-submission-to-DTIC-Final.pdf