The Metal Recyclers Association (MRA) has indicated that it is opposed to the draft government proposal to restrict the export of ferrous and nonferrous scrap metal through a mechanism stipulating that domestic consumers are given first right of refusal and preferential prices.

The proposed directive was published in the Government Gazette of January 25 along with a call for public comments to be submitted by the end of February.

Spokesperson Mark Fine told Engineering News Online that the MRA had been surprised by the proposal, as it came amid a Business Unity South Africa-facilitated engagement with the foundry sector, being held under the auspices of the National Economic Development and Labour Council.

The South African Institute of Foundrymen (SAIF) had previously confirmed with Engineering News Online that it supported the proposal to regulate scrap exports. SAIF argued that the lack of access to competitively priced material had negatively affected foundries, many of which were small family owned enterprises.

The draft directive stated that ferrous and nonferrous scrap should not be exported unless it had first been offered to domestic users for a period determined by the International Trade Administration Commission of South Africa (Itac) and based on a discount formula also to be determined by Itac.

Exporters would also be required to secure a permit and permit applications would need to be accompanied by confirmation from a metallurgical engineer of the type, quality and quantity of material destined for export. The timing and destination of such exports would also need to be provided.

The MRA described the proposed mechanics as “unworkable”, adding that it was “unfair” to expect scrap suppliers to subsidise a partially ailing scrap-consuming industry.

Fine said the MRA was taking the matter “very seriously” and that it planned to offer a formal response to the Economic Development Department.

The MRA would not support any intervention that resulted in the creation of an “artificial market situation”.

It was also opposed to the proposal that a metallurgical engineer sign-off on export applications – a proposal that did not take account of the volumes involved, nor the variance of product within any pile of scrap.

Fine refused to be drawn on whether or not the Itac bureaucracy was in place to administer the proposed permitting system and the discounts.

However, he noted that, under the current system, whereby export permits were advertised for 10 days to local consumers, it typically took exporters double that time to secure the required documentation from Itac.

The gazette notice indicated that the policy would be instituted for a period of five years and then be reviewed.