Uncompetitive scrap metal prices causing further decline in industry

23rd September 2016 By: Simone Liedtke - Writer

Uncompetitive scrap metal prices causing further decline in industry

ALUMINIUM SMELTING PLANT Scrap and aluminium metals are being processed further into semi-finished products
Photo by: Bloomberg

Unless strong action is immediately taken to stem the export of scrap metal and keep it in South Africa at competitive prices, the scrap beneficiating industry will further decline and directly affect the aluminium sector, says aluminium foundry alloys producer Zimco Aluminium Company (Zimalco) sales and marketing director Bob Stone.

“Owing to a high price for scrap metal and closures in the consuming industries, final original-equipment-manufacturer users are importing more finished products that were and should be manufactured locally.”

He adds that the effect on local industry can clearly be seen and has been adding to the current economic woes of South Africa.

Stone notes that the local manufacturing of aluminium products can create jobs and assist government in achieving its National Development Plan goals, but, instead the current situation is further contributing to deindustrialisation.

“Should deindustrialisation continue, the different uses of aluminium will be affected, as secondary aluminium produced from scrap metals is a necessity if South Africa is to have safe and drinkable water, a stable electrical distribution and steel industry, as well as a successful automotive manufacturing and an efficient mining industry,” he explains.

Useful Application

Scrap metal and aluminium is purchased from industrial enterprises and many other sources by scrap metal dealers.

The scrap is then sorted into various product types and grades and is then sold locally or exported. This cleaned scrap is then sold to local smelters for further processing into many semi-finished products for consumption in the manufacturing of steel and other finished products.

Waterborne solids are a very serious health risk and aluminium compounds are used in drinking water treatment to remove the harmful particles. Aluminium compounds can purify the water by coagulating the solids by causing them to clump together in larger particles that are then easily removed.

Aluminium-based electrical cable is the conductor of choice in utility grids. Aluminium metal has significant cost and weight advantages, and is the preferred material for electricity transmission and distribution uses.

Also, the Aluminium Association notes that the use of aluminium in commercial vehicles is increasing, owing to its ability to boost the fuel economy by reducing weight and, therefore, reducing carbon emissions while maintaining or improving safety and durability. Scrap aluminium is being exported because there is a high international demand for scrap metal of all types from countries such as India, Stone adds.

He warns, therefore, that should the exporting of aluminium, besides other metals, persist, the beneficiating industries in South Africa will further decline with the closing of businesses, subsequently, resulting in further job losses.