New rules unsettle scrap dealers

RECENT amendments to the published export guidelines for ferrous and nonferrous waste and scrap have created uncertainty and fear among small and medium-sized scrap merchants.

RECENT amendments to the published export guidelines for ferrous and nonferrous waste and scrap have created uncertainty among small and medium-sized scrap merchants who fear that they could be forced out of the market because of the more stringent measures.

The initial export guidelines published by the Department of Economic Development last year were aimed at making sure local scrap metal users in SA had sufficient material, yet since their publication several concerns have been raised about possible anticompetitive outcomes and effects on small merchants who are focused on the export market.

The amendments to the initial policy, published in May, has seen a flood of correspondence to the International Trade Administration Commission, which is responsible for the implementation of the policy.

Smaller scrap merchants say if amendments were implemented, dealers leasing yards would be excluded as only owners would be allowed to export. They say they would have less working capital because of the new seven-day payment period. They also say job losses could be unavoidable.

The department last year introduced measures through its published guidelines to allow foundries, mills and secondary scrap processors to buy scrap at a preferential rate of 20% below the international spot price that South African exporters can get for waste metal. Scrap merchants have to offer their waste to local buyers before applying for export permits.

SA exports about 1.5-million tonnes of scrap metal every year, which is 40% of the country’s collections.

Smaller scrap dealers claim the amended guidelines would entrench the position of bigger scrap merchants given their current relationship with foundries as their “authorised dealers”.

Economic Development directorgeneral Jenny Schreiner said the new price-preference provisions seek to sustain local foundries that will increase local value add as well as jobs. “The available evidence shows that the guidelines will promote job creation,” she said.