New law scraps cash-for-scrap
THE government has ratified a law that will ban cash transactions in scrap trading and suspends certain metal scrap exports for six months in a bid to stem the economy from haemorrhaging R47 billion annually.
Pending only gazetting – which is expected by Friday – the new regulations also introduce a licensing system for traders in an attempt to crack down on stolen copper and scrap, and to protect the state’s besieged infrastructure networks.
Trade, Industry and Competition Minister Ebrahim Patel announced the law changes in Parliament alongside other Cabinet ministers.
City law enforcement spokesperson Wayne Dyason noted a correlation between the vandalism phenomenon and the Covid-19 lockdowns, where infrastructure such as pump stations and community halls was left unattended. The possibility of organised crime cannot be discarded, he said.
The Cape Argus recently reported that parliamentarians were processing a draft policy to outlaw cash in dealing with scrap as parastatals took knocks from infrastructure damage, while the City pegged losses at R50 million in 2021/22, R1.8m in June and R1.5m in July.
In his February State of the Nation Address, President Cyril Ramaphosa broached a new policy on the sale and export of scrap metals.
Patel said the research confirmed cable theft, in particular, imposed costs that went beyond the value of the material stolen.
“It’s the enormous damage in the disruption of rail, transport and electricity and effectively cuts production in the economy,” he said.
In addition to draining the economy to the tune of R47bn annually, according to a report by Genesis Analytics, Patel said the criminality inhibited Transnet, Eskom and the Passenger Rail Agency of SA and mining operations.
He said South Africa bled in excess of R130m daily. Patel said the policy garnered more than 2 800 comments in its public participation process.
He said the regulations aimed to reduce demand for stolen scrap metal by limiting exports of certain products for a limited period. Copper and copper alloys, as well as ferrous (iron) metals, would be prohibited for six months, while a permit system would apply to semi-finished copper exports.
This will be overseen by the International Trade Administration Commission.
The six-month ban preceded a “final set of measures to better regulate trade” the products, after which a licensing system would be put in place on all copper trading.
“It is intended that sellers of copper waste and scrap metal will need to register under the Second Hand Goods Act,” Patel said.
Exempted categories include stainless steel, ferrous waste produced in the “ordinary cause of business as a by-product of the manufacturing process”, and small metal types, such as aluminium.
However, the banning of cash use and the requirement for people to possess an EFT payment slip would not apply in the next six months as Treasury needed to tie up loose ends.
Recyclemania owner Niyaaz Bawa said the trolley-pushing average folk would suffer the most as one cannot electronically transfer R1, which is what cans go for.
“People are unbankable,” Bawa said. “I’m not sure what I’m going to do (when cash transactions are barred). I’ll get to that hurdle when it comes.”
Fine Trading Scrap Metal owner Mark Fine said he would comment when the regulation was gazetted.
Those exporting to export markets, such as Bangladesh, China and India, said they would have to close shop and figure out another way of living.
Patel said other types of exempted products were to be released later yesterday.
Some already-existing legislation would be overhauled to fall in line with the new law, he said.
Patel said the police would shift from policing hundreds of thousands of scrapyards to focusing on disrupting criminal syndicates and their logistics through banning cash transactions and forcing traders to maintain registers.
Public Enterprises Minister Pravin Gordhan said he was eager to see the laws implemented as Transnet had lost 742km of stolen cable this year.
Police Minister Bheki Cele said task teams dealing with economic crimes, since June, had arrested 1 946 alleged transgressors from 3 776 operations, while 43 had been handed jail sentences ranging between one year and 26 years.