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Foundry Daily News

15. September 2013

SA - LETTER: Scrap metal restrictions unjustified

There are many misconceptions about the proposed restrictions on exports of scrap metal (Breathing new life into the scrap metals industry, September 6).

• There is no reason to believe that restricting exports of scrap copper will result in a reduction in the theft of copper conductors. Before loading containers of scrap copper for export, exporters have to submit full documentation to customs authorities.

Therefore it is very easy for police to inspect what is being loaded for export and to determine whether stolen copper is included.

On the other hand, stolen copper can be delivered to local foundries and melted down without any notification to customs or police authorities, giving them no opportunity to inspect.

• Street collectors of scrap metal will suffer most from an artificial reduction in the price paid to them for scrap metal they deliver. It is all very well for the South African Institute of Foundrymen to say that street collectors are not only reliant on scrap metal and that they can do something else to supplement their income.

Our members purchase from tens of thousands of such people who subsist on collecting scrap such as beverage cans for which they are paid about 10c each.

They spend their whole day searching for scrap metal. It takes as long to find a beverage can for which they will get 10c as to find a can for which they will now get only 8c in order that SA foundrymen can buy scrap cheaper. Where does the institute imagine these collectors will find the time to supplement their income?

• The assertion by the Steel and Engineering Industries Federation of SA (Seifsa) that local foundries have been paying the highest prices in the world for scrap metal as it is priced at export parity, makes no sense. If scrap is priced at export parity (which it is) there must be foundries in other countries paying prices high enough to make it worthwhile to sell to them and to pay the freight costs to those countries.

By definition the prices offered by foreign foundries must be higher than the prices paid by SA foundries, since scrap recyclers do not have to pay freight costs to foreign countries if they sell the scrap to SA foundries.

The truth is that foreign foundries pay more for scrap than South African foundries but local foundries are still pushing the minister for a further reduction based on false assertions such as that made by Seifsa.

• The motivation for restrictions on exports of scrap metal was based on the foundries advising the minister that they were unable to procure enough scrap metal to keep their foundries busy.

We have written to the institute asking for details of all foundries in this position in order that we can refer such requirements to our members to negotiate supply to such foundries.

Unsurprisingly we have received no response from the institute confirming that there is no such shortage being experienced by the foundries. Instead they simply wish to force the prices below the equivalent of export prices.

• The Metal Recyclers Association of SA is fully supportive of assistance being given to foundries by the state.

But we believe such assistance must come from the fiscus and not from factories which generate scrap metal offcuts or from low-income street collectors who subsist on scrap collection.

Further, each foundry should be carefully monitored to ensure the assistance given by the state is used correctly and not just pocketed, as would be the result of forcing the sale of scrap metal to them at artificially low prices.


Source: Opens external link in new windowMetal Recyclers Association of SA

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