In anticipation of Trade, Industry and Competition Minister Ebrahim Patel’s decision on the way forward regarding scrap metal regulations, and following the extended public comment period which closed on January 12, the Steel and Engineering Industries Federation of Southern Africa (Seifsa) is calling on the Minister not to take a “narrow and short-term view on the matter”, but rather consider the broader consequences of the decision and what is best for the industry in the long term.
“With the benefit of hindsight, the undeniable facts that should be factored into the Minister’s decision-making are that the scrap metal export ban was not at all effective in combating infrastructure damage and the theft of scrap metal. The imposition of the export ban has caused more economic harm than good.
“This is evidenced, inter alia, by the policy being one of the contributing factors to the announcement by ArcelorMittal South Africa on the possible closure of its long products business.
“The export ban also communicated a very poor economic signal where blunt industrial policy instruments are deployed to combat crime, which resulted in a myriad of unintended consequences,” the association contends.
Seifsa notes that the lapsing of the scrap metal export ban on December 15, 2023, and the extension of the public consultation period to January 12, has shown that alternatives to an export ban are possible.
This includes the development of an industry pledge, co-created by the Department of Trade, Industry and Competition (DTIC) and industry to work together to combat the movement of illegitimate scrap metal.
This will be achieved by, among others, the phasing out of the use of cash in scrap metal transactions, rigorously inspecting the origins of scrap metal and an industry zero-tolerance approach to the buying of scrap metal from unidentified sources or where the product may reasonably be suspected to be from stolen public infrastructure, Seifsa says.
“The industry remains committed to signing such a pledge that is underpinned by these principles. These interventions will go a very long way in combating the movement of illicit scrap metal without the need of resorting to an export ban,” it adds.
Moreover, Seifsa says the industry – in the upstream and downstream segments – remains committed to working with the DTIC and government more broadly in the development of an industrial policy framework that is sustainable and conducive to the growth of the industry.
However, it notes that a pre-condition for the successful development of this industrial policy framework is ensuring demand for steel and related products through consistent and large-scale public projects.
To date, this has been a major constraint to the economic benefits of the steel sector, which has resulted in production contraction and a structural decline in employment, it adds.
“The industry is willing to remain engaged and work with the policymakers in finding sustainable solutions to the complex challenges facing the industry; however, the policy path adopted needs to be holistic and not inadvertently create pockets of tension between different segments of the industry,” it stresses.