S Africa halts scrap metal exports as industry hit by coronavirus pandemic

"Scrap metal is an essential material for the domestic processing industry, which itself is crucial for the South African manufacturing industry and for infrastructure development,” Trade, Industry and Competition Minister Ebrahim Patel said in a statement issued on Friday. “Due to the steep global increase in prices and reduced economic activity, the industry has called on government to urgently assist it," Patel said.

South Africa has prohibited new exports of ferrous and non-ferrous waste as it seeks measures to support the metals industry which has been severely hit by the COVID-19 pandemic, Trade minister has said. The downturn in global manufacturing resulting from COVID-19 has led to the amount of scrap metal available locally and internationally being dramatically reduced and, as a result, prices have increased sharply.

Local mini-mills and foundries have made representations that they are struggling to survive and have called on the government to help protect their investments, save jobs, and livelihoods. "Scrap metal is an essential material for the domestic processing industry, which itself is crucial for the South African manufacturing industry and for infrastructure development,” Trade, Industry and Competition Minister Ebrahim Patel said in a statement issued on Friday.

“Due to the steep global increase in prices and reduced economic activity, the industry has called on the government to urgently assist it," Patel said. "I have therefore issued a trade policy directive to the International Trade Administration Commission of South Africa (ITAC) to urgently investigate the market conditions around the demand-supply imbalance in the scrap metal industry as a result of COVID-19," he added.

“The objective of this investigation is to determine appropriate amendments to the Price Preference System guidelines which can address the shortage in affordable good quality scrap metal," Patel said. No ferrous and non-ferrous waste and scrap of any kind may be exported during the two months that the minister has allowed for the ITAC investigation.

However, this prohibition will not affect existing export permits or applications made before the announcement of the investigation. Patel also said that the government had plans to introduce an export tax on scrap metal as soon as possible.

The metals value chain is central to South Africa's industrialization and has significant linkages to infrastructure, construction, mining and a range of manufacturing industries. The three largest consumers of metal products in South Africa are the construction industry, the mining industry, and the transport equipment manufacturing industry, which together account for approximately R 750 billion or 15 percent of South Africa’s GDP and employ nearly two million people.

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