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Guidelines on the Exportation of Scrap Metal Amended

October 6, 2020

Department of Trade, Industry and Competition

Amended Export Control Guidelines on the Exportation of Ferrous and Non-Ferrous Waste and Scrap are in place.

The trade, industry and competition department published the amended Guidelines in Government Gazette 43765.

Comment was sought on the Guidelines at the beginning of September 2020 in Gazette 43670.

At the beginning of July 2020, the trade, industry and competition minister, Ebrahim Patel, in Gazette 43501, called on the International Trade Administration Commission (ITAC) to urgently investigate whether the Policy Directive on scrap metal is continuing to meet its objectives.

The Policy Directive limiting the export of ferrous and non-ferrous scrap metal came into force in 2013.

It set out the policy in terms of which the ITAC was to exercise its powers under the ITA Act in administering the exportation of ferrous and non-ferrous waste and scrap metal.

ITAC subsequently issued export control guidelines.

The guidelines put in place a price preference system to assist domestic users, processors and recyclers to purchase scrap metal at a preference price for local consumption before the metal is exported.

The guidelines also contained substantiated proposals on what the price percentage lower than the Metal Bulletin price as determined in Rotterdam should be.

Local foundries, mills and smelters of scrap metal are given first option to buy the scrap at the preferred price for which an export permit has been applied for.

If no interest is shown in the metal by local operators within 30 days, then the exporter is able to continue with the export plans.

The price preference system is managed by the ITAC.

The Policy Directive was extended for a further nine months from 31 March 2020 until 31 December 2020.

The extension was implemented to enable treasury and the trade, industry and competition department to finalise the implementation of an export tax on scrap metal.

The ITAC was also instructed to determine whether there is a “shortage of scrap metal for the domestic processing industry, whether the discount, delivery and payment terms should be amended and whether another formula should be applied to achieve the objectives”.

The amendments focus on, inter alia, subject merchandise, price preference calculation, administration, agreement and the application.

The amended guidelines came into effect on the date of publication.

In a statement, the department announced that ITAC has completed an initial investigation into the supply of scrap metal as an input to the domestic steel producing industry, and has made certain changes to the Price Preference System (PPS), to improve access to affordable scrap metal for the domestic steel and other metal producing industry.

According to the department, key changes made by ITAC to the PPS include the imposition of an additional discount of 10 percent where domestic consumers are located in inland provinces and scrap metal is located at the coast to account for transport costs; the right for domestic consumers to weigh and inspect the materials to ascertain that material delivered is the same quality, type and weight as agreed to when the offer was made and concluded, and the right to claim reasonable compensation for costs incurred where quality, type and weight differ from what was agreed and increased surveillance by ITAC to ensure that materials (quality, grades and quantities) comply with the approved permit, including the right to take legal action for any misrepresentation from sellers.

The department pointed out that the “amendments to the guidelines are intended to improve the domestic consumers’ access to affordable scrap metal and address the concerns raised by the industry in the interim period”.

Meanwhile, the department, in Gazette 43758, announced that the conditional exemption in terms of the Competition Act for the Abalone Farmers Association of South Africa (AFASA), granted in 2019, has been extended for another six months until 31 March 2021.

According to the notice, the Competition Commission will use the six-month period to engage AFASA on the Industry Transformation Plan and implementation thereof.

In a separate matter, the department highlighted the need for partnerships in mega projects as critical to the success of the Africa Continental Free Trade Agreement (AFCFTA).

The statement follows a South Africa and Mozambique virtual Trade and Investment seminar that took place under the theme “Developing Afrocentric solutions and forging partnership in response to COVID-19”.

Five working groups on agriculture and agro-processing, natural gas, electricity and power, transport and logistics infrastructure, and trade and investment have been set up.

In another statement, the department announced that trade, industry and competition minister, Ebrahim Patel, has been elected as chair of the Ministerial body tasked with finalising negotiations on the terms for the commencement of the preferential trade under the AfCFTA.

The minister takes the leadership of the African Ministers of Trade three months prior to the start of trading under the AfCFTA.

“Each of us needs a strong Africa, an Africa that has deeper levels of industrialisation, more jobs for young people and greater wealth-creation. That is the goal. The African Continental Free Trade Area is the means. Effective implementation is the challenge we must address,” said
Minister Patel.