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02. November 2008

South Africa - State to Delay Limit on Exports of Scrap Metal

THE government has agreed to delay export restrictions on scrap metal because of the potential implications of such a ban.

The National Recyclers Organisation said the agreement was reached during a meeting with trade and industry department officials. The department will now await the findings of an independent study on the scrap metal value-chain.

In an apparent reaction to soaring steel prices, and evidence of price-fixing in the industry, trade and industry minister Mandisi Mpahlwa in July said the government was considering limiting scrap metal exports. This in a bid to ease input costs on downstream manufacturing.

The measures were to have included the introduction of export taxes.

The planned export clampdown followed an investigation by competition authorities which exposed a cartel in the scrap metal industry. The Reclamation Group agreed to a R146m fine for its part in price-fixing.

Steps had already been taken to tighten the export of scrap metal , with the International Trade Administration Commission publishing a notice in the Government Gazette, notifying industry that an export permit was needed for the export of a host of scrap metal products.

These include ferrous waste and scrap, refined copper wire bars and billets, copper-zinc base alloys, copper waste and scrap, nickel waste and scrap, aluminium waste and scrap, lead ingots, lead waste and scrap, lead plates, sheets, strip and foil, zinc waste and scrap and tin waste and scrap.

However, the National Recyclers Organisation said export restrictions could have severe implications for the formal metal recycling industry, and also for thousands of informal traders who make a living from collecting and selling scrap metal.

The organisation met with the trade and industry department to discuss these concerns and its chairman, Sello Mahlangu, yesterday said that the department had agreed to delay the imposition of export restrictions on ferrous and non ferrous scrap metal "until an informed decision could be taken, in partnership with industry".

The original call for restrictions on scrap metal exports came from scrap metal consumers, but Mahlangu said his organisation felt there was no substance to the call, which was motivated for on a purported shortage of scrap.

"There is, in fact, no scrap shortage, and the motivation of consumers is price driven," Mahlangu said.

"At the outset, the government and industry need a precise understanding of metal availability, taking into account supply and demand statistics, and the nature of the industry, and then the result of what might happen if restrictive tariffs were to be imposed."

The organisation has now commissioned an independent consultant to study the ferrous and non ferrous scrap metal value-chain. It will also look at total employment in both the formal and informal sectors, and the effect scrap metal restrictions would have on employment.

Several countries, including China and India, have introduced some measures to restrict the export of scrap metal.

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