Scrap metal crackdown gets mixed response

NEW regulations have been introduced by the Department of Trade, Industry and Competition as well as Public Enterprises to curb metal and cable theft.

Minister Ebrahim Patel and Minister Pravin Gordhan recently jointly announced a six-month ban on the export of scrap metal. They were joined by Minister of Police Bheki Cele and Mondli Gungubele, minister in the Presidency.

According to Patel, the theft of public infrastructure for resale as scrap metal caused more than R47 billion in damage annually to the economy.

“The measures involve the prohibition of the export of scrap copper and ferrous metals for a six-month period, which will be followed by a system to regulate trade in such metals.

“In future phases, new measures will be introduced, including prohibiting the use of cash in copper and scrap metal transactions, following legislative amendments, and limiting exports to a defined number of ports of exit.”

He said these measures were considered and approved by Cabinet on

November 16 as part of a package of measures to address the damage caused by metal theft to public infrastructure, the economy and communities.

It was announced that cable theft had resulted in a R2bn loss in revenue for Transnet in 2021 while about 742km of Eskom cable had been stolen, leading to significant additional electricity disruption.

Twenty multi-disciplinary economic infrastructure task teams had also been established since June, and were fully operational with over 3 000 clampdowns and 1 946 arrests in the course of 2022.

Patel said: “South Africa has an extensive network of electricity and Telkom cables, rail tracks and rail cables, and municipal infrastructure such as traffic lights and drain covers.

“It is practically impossible to police all of this infrastructure, all of the time. The measures approved by Cabinet therefore seek to reduce the demand for scrap metal from the lucrative global market, while simultaneously disrupting criminals’ transport and logistics networks.”

Patel said the implementation would be done in three phases.

In Phase 1, three key interventions are to be implemented:

First, the government will impose a six-month temporary prohibition on all waste and scrap copper and copper alloy exports, and ferrous waste and scrap exports. Limited exceptions will be allowed for ferrous waste and scrap exports.

Second, a permit system that will be administered by the International Trade and Administration Commission will apply to semi-finished copper exports.

Third, import controls through a permit system will be instituted for furnaces and other scrap-transformation machinery.

“These measures are particularly restrictive for copper and copper alloys, as the theft of these metals imposes enormous damage on the South African economy.

“In Phase 2, the government will introduce measures requiring buyers and sellers of scrap metal to show that they are tax compliant and have all the necessary environmental permits in place before being issued with buyers or sellers’ licences.

“These companies will also have to show where the scrap metal originated from and to whom it was sold,” the minister said.

“The measures will ensure that the police service can focus its enforcement resources on companies not complying with the measures, instead of spreading its valuable resources across thousands of public infrastructure sites, individual scrap yards and recyclers.

“In addition, the government may also limit metal scrap and semi-finished exports to a limited number of ports to assist the SA Revenue Service to inspect more containers for illegal and mislabelled metal exports.”

Patel said during Phase 3, the government would consider making amendments to pertinent existing legislation or pass new legislation to create a dedicated metal trading licensing regime.

This, according to Patel, may include prohibiting the use of cash in transactions involving waste, scrap and semi-finished metal products.

Scrap metal dealers painted a bleak picture of the impact the regulations would have on their businesses.

Dean Bodley, manager of Atlantis Scrap, said the regulations would leave thousands of people unemployed. The scrap business was established in 2017.

“I’m not sure how we can survive this one. Most of us will have to close down or reduce staff drastically because we rely on supplying our scrap to exporters.

“We don’t buy any of the illegal stuff because we would not want to destroy our livelihood. Why would we risk going to jail for something like this? At the end of the day, it’s my tax that’s being affected as well.

“To those of us who follow regulations and go according to the book, this is a huge blow. In fact, it’s ridiculous.”

Bodley said he had been in the scrap-metal-dealing business since 1991. He said the problem was that cable theft was not policed properly.

“You will see railway lines hanging wide open on major roads and no one reports it. In my view, the police are just not active enough.”

He said the scrap industry was a big role-player in South Africa.

“This industry generates a massive income for the country. This is going to destroy the industry …”

Another scrap dealer, who did not want to be named for fear of victimisation, said the regulations would lead to a monopoly on who can trade in scrap. He is a manager of a scrap company based in Durban.

“Our turnover dropped by 55% before the ban. There has been a lot of red tape and additional paperwork that has been required even before this, which sometimes made it impossible for scrap trading.

“I don’t know where we will end up. I employ close to 100 people and we will most likely have to downgrade our staff.”

He said he got his scrap locally as well as from the Eastern Cape.

“The transport costs for our suppliers in the Eastern Cape will cost more than the scrap is actually worth now. And this will have a knock-on effect. I don’t even believe this will change anything or curb theft in any way.”

Another scrap business owner said: “The price of scrap will drop to significant proportions. That, along with the high cost of living, will have a dire impact on us.”

She said her business got scrap from other scrap dealers, walk-in customers and those demolishing their homes.

“Our industry is a vital part of recycling and repurposing metal. The metal we sell becomes a part of our infrastructure. This is an injustice to us.”