Scrap metal crackdown: Govt announces new rules and export ban

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 Scrap metal and copper cable theft is estimated to have cost the SA economy over R47 billion in damages.
Scrap metal and copper cable theft is estimated to have cost the SA economy over R47 billion in damages.
Nathan Laine/Bloomberg
  • Government will ban scrap metal exports for six months to limit the damage of copper cable theft to the economy.
  • It is estimated to have cost the economy over R47 billion in damages annually.
  • Public Enterprises Minister Pravin Gordhan says those behind the theft or sabotage need to be charged with treason.
  • For more financial stories, go to the News24 Business front page.

To make it harder for criminals to hold and sell stolen cable copper and scrap metal, government plans a six-month ban on the export of scrap and waste metal.

Copper cable theft is rampant, contributing to power outages and leaving trains stranded.

Other measures were also announced on Wednesday, including a planned licensing system for copper trading, which will be launched in six months. Amendments to existing legislation, such as prohibiting the use of cash in transactions involving waste or scrap metal will be gazetted. Buyers must show an electronic banking record for the scrap metal they possess.

Intended sellers of copper waste and scrap metal must also be registered. Applicants will have to show relevant tax clearance and must submit purchase and sales information on a centralised database to be able to trade.

"Only registered buyers will be able to purchase from registered sellers," Trade, Industry and Competition Minister Ebrahim Patel Patel said at a briefing in Cape Town.

Similar measures are in place for ferrous metals (that contain iron) and other metals – but exceptions would apply for stainless steel by-products and aluminium.

Police searches will be directed to logistics and distribution networks like ports so that they can disrupt criminal syndicates, Patel said.

Those behind scrap metal and copper cable theft, which has cost the economy over R47 billion in damages annually, need to be charged with treason, Public Enterprises Minister Pravin Gordhan said at the briefing.

READ | EU warns SA scrap export ban may contravene WTO obligations

Gordhan said that the consequence of the theft has meant that some R2 billion was lost in revenue for state rail and freight company Transnet. In some cases as with Eskom these are acts of "genuine theft", but in others these are acts of "genuine sabotage," Gordhan said.

"If this kind of theft and sabotage continues, and begins to have the kind of impact it has had on the economy and institutions themselves - consideration should be given, quite seriously, to charge some of the people involved in this kind of sabotage at Eskom, at Transnet and perhaps even Prasa with treason," said Gordhan. These actions are disrupting the economy with consequences for government revenue, that of institutions like state-owned enterprises, and the way the business sector operates.

"We need some candidates, and there are many around, which should be charged with treason and face the consequences of law enforcement capability that we have in this country," he added.

In August government published draft policy proposals with interventions to clamp down on the trade of stolen scrap metal, which causes billions of rands of damage to the South African economy every year.

Government, having taken into account over 2 800 comments from different stakeholders – such as businesses, industry associations, organised labour, members of Parliament and individuals – will gazette a finalised set of measures which were approved by Cabinet earlier this month.

READ | Govt proposes six-month scrap metal ban to combat cable theft

Patel said that the measures were informed by researchers from Genesis Analytics and the Trade and Industrial Policy Strategies, which government commissioned to analyse the impact on the economy. They found the most "effective way" to dampen demand for scrap metal is to prohibit exports for a period. The export ban is effective once the gazette is published.

He explained that the economic damages are limited to impacts on state-owned enterprises like Eskom and Transnet. This means that when damages to the rest of the economy are taken into account, they exceed R130 million every day.

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