Trade union federation joins call for scrap metal export ban

The newly formed South

African Federation of Trade

Unions (Saftu) – led by

trade union heavyweight

Zwelenzima Vavi – has

joined the call to ban scrap

metal exports to ensure the

global competitiveness of

downstream steel producers –

and thus safeguard jobs.

According to Vavi, a ban

on exports from South Africa

would create a surplus of scrap

material locally which would

in turn lead to reduced prices

and thus create a competitive

advantage for the growth of

an industry that could easily

beneficiate this material

into secondary value-added

products,” he said.

Scaw Metals CEO, Markus

Hannemann, agreed noting

that there was enough scrap

steel available locally but

that exports of the product,

mostly to India and Pakistan,

had pushed up local prices

of scrap steel, thus affecting

the local manufacturing

competitiveness.

He pointed out that

government’s solution to

industry cries for a ban on

scrap metal exports had been

to introduce the preferential

pricing system (PPS) in 2013

in an attempt to limit the

export of both ferrous and

non-ferrous scrap.

The terms of the PPS

dictate that local buyers of

scrap metal, such as foundries,

mills, mini-mills and

secondary scrap processors,

are supposed to get the

product at a price below the

international spot price.

But, added Hanneman,

the PPS had so far proven

to be ineffective in limiting

the export of scrap material

because scrap exporters

found ways to circumvent the

regulations.

Virusha Subban, a partner

specialising in customs, excise

and international trade at law

firm Bowmans, explained

that such tactics included

inflating the preference price

by charging for delivery

over and above the quoted

price, demanding impossible

sale conditions, upfront

cash payment or reams of

documentation before selling

to local buyers.

“On the other hand, scrap

dealers complain of tonnes

of waste metals piling up in

their scrapyards due to the

time delays involved in first

offering local industry, then

applying for a permit and

waiting for it to be granted,”

she said. The scrap dealers

argue that although most

applications may be approved,

all delays in the movement

of the metal increase their

exposure to commodity

market risks and precipitate

cash-flow issues.