In 2013 the Minister of Economic Development Comrade Ebrahim Patel published a policy directive on scrap metal specifically on the exporting of ferrous and non ferrous metal. Ferrous metal refers to metals that mostly contain iron such as stainless steel, cast iron usually found in tools, housing construction, railways; and non ferrous metals refer to metals that do not attract a magnet and do not contain iron such as aluminium e.g. coke cans, copper, and electric cables.
In terms of the scrap metal policy, the metal recyclers must not export the scrap unless it is offered to local users of scrap and at a 20% price discount; in order to encourage availability of scrap for local use than for export and at lower prices.
According to Minister Patel; the reason for the policy was to discourage export of high grade scrap and to ensure that jobs are retained amongst firms that use scrap as an input into the production processes such as foundries. The minister also argued that many steel mills, secondary smelters and foundries have closed shop because they can’t afford the local scrap metal that is sold at international prices in the country.
In 2014 the International Trade Administration Commission (ITAC) which is a government body that issues permits for exports and imports refused an application by the SA Metal Group, which is an umbrella body for scrap recyclers and exporters to be exempted from the scrap metal policy.
SA Metal Group went to the High Court and argued that the policy amounts to restrictions on exports violated the World Trade Organisation rules. In December 2015 the High Court dismissed the application. In March 2016 the appeal to the Supreme Court of Appeal was also dismissed. According to the Department, the Constitutional Court has recently dismissed the application and has confirmed that that the policy is legitimate and legal.
The scrap metal industry is one the biggest industry and is estimated to be worth R15 billion rand. However the informal scrap collectors are getting a pittance and are not supported by industry or government. Scrap is important because it is used in the building industry, roads, bridges, trains, vehicles and in electrical appliances. It also reduces environmental degradation.
We congratulate the department of Economic Development for being firm in pursuing policies that will ensure that scrap is cheap and scrap users, such as steel mills are able to access scrap and to create jobs. We appreciate that policies that seek to advance industrialisation and deviate from the current export oriented policies will be opposed by the white monopoly capital, and government must be firm and oppose any application by monopoly to derail policies that seek to ensure local development.
This is a lesson to other government ministers that they must defend radical policies if they are challenged. We have noted that many government departments always rollover and choose to abide by court decisions without coherently and forcefully putting their views to the court.
Whilst the policy is not adequate to address prices of steel products and prices that are paid to the informal sector scrap collectors; it is a victory against white monopoly capital. We call on the department to impose a 50% scrap metal exports tax in order to discourage exports, and to regulate prices of scrap to ensure that scrap collectors benefit.
Issued by COSATU