The multi-billion rand scrap metals industry could be in for a shock overhaul as government seeks to prohibit scrap metal cash transactions, as well as blacklist dealers who break the law and buy stolen cables.
These are two examples among a raft of new measures the government wants to implement, along with a proposal to ban scrap and waste metal exports for six months, in a bid to curb the widespread theft of copper cables.
The plan could face serious pushback from scrap metal businesses, lobby groups and opposition political parties. They have three weeks in which to submit comments.
The theft of copper cables and other metals from public infrastructure has crippled power supplies, left trains unable to operate and damaged public facilities in many parts of South Africa.
The proposals were developed following consultation by government’s economic cluster: the Department of Trade, Industry and Competition (DTIC); National Treasury; the Department of Mineral Resources and Energy; the Department of Public Enterprises; and, the Department of Transport, as well as the police.
Trade and Industry Minister Ebrahim Patel, who published the proposals in the Government Gazette on Friday, called for public comments and representations on the proposed measures within 21 days, before final decisions are taken.
The draft measures propose a temporary six-month export prohibition on ferrous and non-ferrous waste and scrap metal, including copper cable, together with a permit system for export of specified semi-processed metal products.
This is the first of three envisaged phases, with further action proposed in future. This includes a new registration system for buyers and sellers of scrap metal in an effort to improve monitoring and law-enforcement, as well as placing limitations on the ports.
The registration system would also potentially affect border posts used for trade in scrap metal, with changes to legislation making it more difficult for stolen copper and metal to be traded.
The measures were developed as a result of ongoing, crisis-level damage to public infrastructure due to the theft of electricity cables, power pylons, railway tracks, traffic lights and manhole covers.
“Criminals are targeting public infrastructure that taxpayers have invested in to expand service delivery to communities across the country,” the DTIC said.
In January this year, the Kenyan government imposed similar restrictions, but lifted the ban after two months due to public pressure and unclear policy guidelines.
In South Africa, an independent research team from Genesis Analytics, commissioned by the DTIC, estimated the damage to the South African economy from the theft of copper alone totalled more than R45 billion a year.
Researchers found the export of metal provided a crucial money channel for criminals. Further, that South Africa’s ports and borders were not adequately monitored to prevent the export of stolen scrap and semi-finished metal products.
Transnet’s regularly published cable theft statistics show that during a single week in April this year, there were 123 attacks on South Africa’s rail infrastructure, including the theft of 39.4km of copper cable.
The Democratic Alliance (DA) has flatly rejected the proposals, saying they are an admission by government that it has failed to set up law enforcement to combat the theft and vandalism of public infrastructure.
DA trade and industry spokesperson Mat Cuthbert said Patel has been lobbied extensively by special interest groups in the upstream steel industry so that they are able to make obscene amounts of money at the expense of metal recyclers.
“While there are illegal metal recyclers who benefit from and are complicit in the pillaging of public infrastructure and should be criminally prosecuted, it is patently unfair to paint everyone in the industry with the same brush,” Cuthbert said.
“The fact is that there is a significant proportion of those in the industry who abide by the law and conduct legitimate business dealings. The DA reiterates that this issue is a crime problem and not a trade policy issue.”
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