South Africa’s Metal Recycling Association (MRA) will take legal action against the country's government if a directive to kerb ferrous and non-ferrous scrap exports is enforced, according to Mike Wilson, spokesman for MRA.

In January, the minister of economic development, Ebrahim Patel, published the draft policy directive in the Government Gazette, proposing that ferrous and non-ferrous scrap metal should be offered for sale in the domestic market at a discount before it can be exported.

The directive is currently open for public comment.

“This directive will affect the bottom line of absolutely everyone in the scrap industry, which will in turn affect employment in the country,” Wilson said.

He noted that the cost of transporting scrap from different parts of the country to port, and then from port to an overseas customer, increases the price of scrap substantially. Therefore, he argued, domestic buyers already buy the scrap at discounted prices.

“We are engaging with the government, but the MRA is significantly down the legal road, and we will go to court the moment the government enacts on this directive,” he added.

However, the South African Institute of Foundrymen (SAIF) said a reduction on input costs would be welcomed by all in the foundry business.

“We see the input cost issue as critical for the foundry industry, and we continue to engage with the recycling industry to find a feasible solution,” John Davies, ceo of the SAIF, said.

“Yes, foundries will welcome scrap at discounted prices, but this is a complex issue,” he said.

Foundries, he noted, consumed only about 400,000-500,000 tpy of ferrous scrap of the 3.5 million tpy of ferrous scrap produced in South Africa. About 1.6 million tonnes of ferrous scrap was exported in 2012.

However, foundries have been grappling with rising input costs, resulting in more than 20 foundries closing in the past 10 years. It has also been harder to source the high-quality scrap needed for foundries when they had to compete with international buyers.

“The idea of a low-cost input is attractive for the foundries, there is no doubt about that,” he said.

Bianca Markram
editorial@metalbulletin.com