Government has welcomed yesterday’s Constitutional Court ruling to dismiss a challenge to its scrap metal export rules, with the Minister of Economic Development, Ebrahim Patel, vowing to act against transgressors of the law.
The ruling brings almost four years of litigation to an end over the lawfulness of the price preference system which requires scrap merchants to first offer their product to local buyers at a discounted price, calculated monthly, for a set number of days. Proof of having done so with no resulting purchase is required before an export permit will be issued.
Scrap metal is used to manufacture a number of steel products and the trade policy directive forms part of government’s plan to promote local industrialisation and the beneficiation of local scrap metal following significant job losses and de-industrialisation in the steel industry.
Cases were brought against the policy by the Metal Recyclers Association and later by the SA Metals Group. One court application was withdrawn before it was heard. In all other instances, the cases were decided in favour of the state.
The Constitutional Court dismissed the application for leave to appeal on the grounds that it had no reasonable prospect of success.
Patel said that the decision makes it clear that rational decisions by the state in favour of job creation and industrialisation would be upheld by the courts.
“Our Constitution enables government to intervene in support of legitimate public purposes. Government will act to ensure that our industrial base and employment are supported,” he said.
Patel pointed out that prior to the trade policy directive, SA saw a significant increase in export of the raw material to the detriment of local industry. “Volumes of ferrous scrap metals increased by 340% between 2003 and 2012. Since the introduction of the Trade Policy directive, export levels dropped and local foundries and mini-mills reported an improvement in the supply of scrap metals,” he said.
