A new policy directive enabling local buyers of scrap metal to get it at 20% below the international spot price, have been welcomed by fabricators and smelters, amid the hope that this will stem growing exports of scrap metal to Asia.
The directive, introduced by government in early August, is aimed at reversing deindustrialisation in the country.
It would allow local buyers of scrap metal such as foundries, mills, minimills and secondary scrap processors to buy scrap at a preferential rate of 20% below the international spot price available to South Africa exporters of ferrous and nonferrous waste metals.
South Africa has in recent years seen an upsurge in exports of scrap metal exports, with much of this blamed on organised syndicates even targeting public infrastructure in an effort to take advantage of high metal prices, especially of copper.
At the beginning of August the Department of Trade and Industry published the policy directive that gives the International Trade Administration Commission the power to regulate the exportation of scrap metal by barring exports if the metal has not first been offered for local beneficiation at a price discount of 20%.
Chairman of the Non-Ferrous Metal Industries Association of SA Bob Stone said reports by the National Foundry Technology Network showed that between 2007 and 2011 the country had faced a 13% drop in the number of foundries still operating.
Industries such as secondary metal smelters, foundries and scrap processors have suffered for the past 13 years due to the lessening availability of affordable and quality scrap metal as Asian exports of metals such as copper, brass, lead, aluminium and zinc "soared", said Mr Stone.
In January Economic Development Minister Ebrahim Patel published a draft policy directive inviting affected industries to comment.
This came amid the recognition that increased exports were depriving the local scrap-metal processors of affordable and quality inputs.
Mr Stone said as demand for scrap metal increased the price rose to such an extend that the cost of scrap metal to the local industry amounted in some cases to 70% of their total running costs. He said that their were several other challenges facing the manufacturing industry in South Africa, but commended government for realising the need to level the playing field in terms of prices for an important input material in the manufacturing sector.
South Africa exports about 1.5-million tonnes of scrap metal every year, which is 40% of the country’s total scrap collections.
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