In anticipation of the Minister of Trade, Industry and Competition, Minister Patel’s, decision on the way forward regarding the scrap metal regulations and following the extended public comment period which closed on the 12th of January 2024, SEIFSA encourages 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 hind-sight 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 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 (AMSA) 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 lapsing of the scrap metal export ban on the 15th of December 2023 and the extension of the public consultation period to the 12th of January 2024, has brought to the fore the fact that alternatives to an export ban are a very real possibility.
The first of which is the development of an industry pledge, co-created by the DTIC and industry to work together to combat the movement of illegitimate scrap metal. This will be done by, inter alia, 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 purchases of scrap metal from unidentified sources or where the product may reasonably be suspected to be from stolen public infrastructure. 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.
Moreover, industry in the up and downstream segments remains committed to working with the DTIC and Government more broadly in the development of industrial policy framework that is sustainable and conducive to the growth of the industry. However, 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.
The industry is willing to remain engaged and work with the policy makers 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. .