The Steel and Engineering Industries Federation of South Africa (SEIFSA) represents 18 Employer Organisations, who collectively represent in excess of 1300 companies and employ approximately 170 000 employees in the sector. The federation’s affiliated membership constitutes the entire metals value chain from metal production, merchants, metal fabrication, heavy and light engineering.

SEIFSA will be providing detailed comments in due course but wishes to provide its opinion on two main and critical issues and themes which emerge from the proposed amendments. We believe there is not proportionate nor appropriate industry regulation to achieve the desired ends and minimize resultant harm. Further, it will have severe unintended consequences. It will offer no further assistance to Government to achieve the aims and objectives of the draft policy on measures, to restrict and regulate trade in ferrous and non-ferrous metals waste, scrap and semi-finished ferrous and non-ferrous metal products to limit damage to infrastructure and the economy.

Enhanced Reporting Requirements

The proposed amendments envisage an enhanced reporting system which will require the submission of monthly electronic reports via the Metal Trading System (MTS) showing all purchases and sales of metal products. Whilst we support reasonable and rational reporting requirements to track the trade in scrap and waste metal (which are already required under the Second-Hand Goods Act), the submission of the very granular detail envisaged under the MTS has not and cannot be accepted by industry in its current form. Its attempted introduction under the guise of an amendment to the Regulations of the Second-Hand Goods Act is not action in good faith.

There are a number of critical concerns regarding the proposed MTS and required information disclosure. First, we believe it will render the required information disclosure open to legal challenge and review on the grounds of it being disproportionate, ineffective and not a rational modus/response for solving the mischief that it is intended to curb.

Secondly, we raise serious issues of disclosure and abuse of confidential and proprietary information of which concern has been exacerbated by the security breach suffered by DTIC on 2 January 2024.

The measures will not assist the authorities, as those involved in illicit trade will likely ignore and disregard any such requirements, criminal activity can never be managed by way of regulation. Regulations are adhered to by responsible and law-abiding citizens. Criminal activity requires efficient and stringent policing and the imposition of severe penalties and sanctions. Policing of illegal operators, illegal activity and criminality in the value chain across all metals in South Africa must be far better implemented and enforced in order to curb metal related crime in South Africa.

This raises grave concerns over the disclosure of proprietary information and possible abuse of such information by individuals from government departments and law enforcement agencies, who have been accused of alleged involvement in criminal activities but have yet to be removed from their positions of authority.

Elimination of cash for all transactions

We are most concerned that the prohibition on the use of cash in scrap and waste metal transactions will result in unintended economic consequences and hardship for the informal sector/ waste pickers, many of whom comprise a large segment of the supply/value chain.

The proposed blanket prohibition will threaten the very existence and viability of these bona fide and law-abiding participants, ultimately sterilising this critical component of the supply chain (approximately 350 000 waste pickers per DTIC published figure). This could lead to economic devastation/welfare ruin and enhanced poverty for these operators and those of our people who rely on them for economic support.

The vast majority of these waste pickers are not criminals dealing in stolen material, but rather self-employed individuals desperately trying to eke out a lawful living by collecting untainted scrap metal from legitimate sources and supplying it to registered dealers. These individuals from the informal sector, many of whom do not have the means, and cannot be expected to establish bank accounts.

The major contributing factor to the damage of infrastructure stems from the procurement and trade in tainted copper. We believe the aim of the draft policy will still be met and will not be undermined if allowance is made for this segment of the supply chain to be paid in cash for all scrap and waste metal other than copper scrap and waste. Additionally, to be paid in cash for copper scrap and waste but limited to R10 000 per transaction. We believe that it would be unwise to eliminate this critical and crucial part of the supply chain which represents the very foundation of most recycling activities.

Next Steps

We believe further constructive and meaningful engagement with the Minister and industry stakeholders must take place to find a path for greater self–regulation. This would pave the way for a lasting solution to eliminate theft and damage to infrastructure, in a manner that is workable for all players, avoiding the unintended consequences that some of the draft policy regulations will yield.

Rigorous and ineffective regulation yielding unintended consequences is not a desired outcome for all bona fide participants in the sector and the economy of South Africa as whole.

Elias Monage is the President of the Steel and Engineering Industries Federation of Southern Africa.

The post SEIFSA COMMENTS ON PROPOSED AMENDMENTS TO THE REGULATIONS TO THE SECOND-HAND GOODS ACT appeared first on ProtectionWeb.

South Africa’s vast investment into electricity infrastructure over generations is being systematically stolen, smelted down into ingots and billets, and then exported with impunity by many scrap metal dealers who continue to turn a blind eye to the origin of what they buy.

That’s the view of the Copper Development Agency: Africa (CDAA), a stakeholder in planning counter-strategies with the SA Government for years on the illicit copper economy, as well as monitoring both official action and inaction on the issue.

Copper expert and CDAA acting chair Evert Swanepoel estimates the damage to the SA economy as being worth at least R8 billion per annum.

“There really is a copper crisis and catastrophe in full swing in South Africa at the moment and our members cannot even buy copper in the country – it must be imported at incredible cost – and that whilst tonnes of stolen copper is smelted and exported under the noses of the government, police, port authorities and the SA Revenue Service (SARS).”

“The worst is that the stolen copper export boom – as beneficial as it is to the scrap metal industry at present – is fuelling theft and infrastructure degradation at a catastrophic rate from municipalities and utilities throughout SA.”

Swanepoel said copper cables are in demand because they are already 99% pure copper and thus far easier to smelt down and turn into ingots for export at minimum cost whilst maximising profits for some scrap dealers.

He added that whilst SA seems to be on the cusp of solving the load shedding crisis, de facto black-outs would still plague many at municipal level due to the increase theft of copper cables and transformers at grass-roots level.

“What we could likely find after a mammoth institutional effort to get Eskom working again, is that electricity distribution challenges brought about by cable and transformer theft will be magnified to cause widespread de facto load shedding instead,” warned Swanepoel.

Damage to the electricity supply caused by thieves stealing copper cables has not only increased the
costs incurred by national and municipal power utilities, but has also placed an additional burden on
businesses, residents and service providers already grappling with scheduled rolling blackouts, known
locally as load shedding

The Global Initiative Against Transnational Organized Crime (GI-TOC)

Government strategies have been counter-productive and have not addressed core issues such as scrap cash sales which drive copper theft, and taxing copper exports.

A scrap metal export ban aimed at reducing both copper theft from SA’s crumbling infrastructure and the export of stolen copper was not successful and was not renewed at the beginning of 2024.

Yet the unrelenting lava flow of the illicit red metal out of South Africa  – Africa’s most developed economy – happens without government even attempting to tax the metal tsunami leaving the country, said Swanepoel.

With copper prices on the international market ranging from anything between USD10 000 and $11 000 per tonne, many scrap metal dealers in SA are now cashing in.

Swanepoel last year predicted that the SA government’s ban throughout 2023 on scrap metal exports would come to naught and would only damage the economy and the legitimate copper business.

He pulls no punches as he directly accuses government of “turning a blind eye” to the worsening situation.

“In South Africa we still see government not enacting the necessary regulations as it promised to curb widespread copper theft and export.”

“Now we are stuck with the situation where many in the scrap metal sector make an absolute killing exporting stolen copper which the SA government refuses to stop or is unable to prevent and does not even tax,” said an exasperated Swanepoel.

At the very least, Swanepoel adds, the SA government should take steps to test copper billets for purity before allowing export.

Six months ago, in its report on SA’s illicit copper economic, the Global Initiative Against Transnational Organized Crime (GI-TOC) said every day, criminal elements strip copper from wherever they can find it, including roads, homes, construction sites and mines.

“The theft of copper from already ailing infrastructure severely affects the capacity and operations of state-owned entities and municipalities”

GI-TOC said the country’s critical infrastructure was “at a tipping point after years of chronic mismanagement and rampant theft”, and identified copper theft as a contributing factor.

The post Copper catastrophe: scrap dealers strip SA to fuel stolen red metal export boom appeared first on ProtectionWeb.