South Africa has prohibited new exports of ferrous and non-ferrous waste and has held off issuing export permits till July 15, 2020. The country has also initiated an investigation into scrap supply process slated to be completed within two months. Until the investigation concludes, yards have been asked to refrain from exporting material.
The move by the South African government is aimed at supporting the metals industry which has been severely hit by the COVID-19 outbreak. A demand-supply imbalance in the scrap metal industry is harming the interests of domestic businesses, according to the government.
Thus, the Minister of Trade Industry and Competition has issued a trade policy directive to the International Trade Administration Commission of South Africa (ITAC) seeking an urgent investigation into such exports, while chalking out other measures to support local mini-mills and foundries struggling for survival.
Additionally, to fight illegal trade practices, the South African Revenue Service (SARS) has established an inter-governmental working group. The group will fix a price preference system (PPS) to be administered by the International Trade Administration Commission and determine appropriate amendments which can address the shortage of affordable good quality scrap metal.
At a global level, manufacturing activities have registered a steep decline, in turn, causing a shortage of metallic scrap. Prices, therefore, rose in most of the supplier as well as importing countries. South Africa thus looks to ensure smooth raw material supply for its local metal producers. In its financial budget, the country also planned to introduce an export tax on scrap metal at the earliest.
South Africa’s three major sectors – construction, mining and transport equipment manufacturing together amount to approximately ZAR750bn ($44.3bn), accounting for around 15pc of GDP employing nearly 2mn people.
South African ferrous scrap exports were 43,051mt in May 2020, up from 27,674mt in May 2019. In Jan-May 2020, ferrous scrap exports totalled 242,782mt, up by 59pc from 152,660mt the same period in 2019. India, Pakistan and Bangladesh were the largest export markets for South African ferrous scrap suppliers with over 90pc share.