Major changes proposed for scrap metal sector in South Africa – BusinessTech
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The South African government is looking to clamp down on the thriving scrap metal industry, which has damaged the country’s infrastructure and economy.
To improve the scrap and waste metal trade’s regulatory framework, the Minister of Police published draft regulations on 12 July 2024, amending the Regulations for Dealers and Recyclers under the Second-Hand Goods Act (SHGA) of 2009.
This is to assist in the implementation strategy of the amendments gazetted by the Minister of Trade, Industry, and Competition.
He has invited the public to share comments on the proposals.
In November 2022, the Minister of Trade, Industry, and Competition (DTIC) published a gazette detailing implementation actions for policies aimed at regulating trade in ferrous and non-ferrous metal waste, scrap, and semi-finished products.
The DTIC said these measures are “to address the theft of public infrastructure for resale as scrap metal that causes more than R47 billion damage annually to the economy.”
The proposed changes include:
Enforce the registration regime for scrap and waste metal dealers
Currently, only buyers are required to register under the SHGA, but going forward, sellers must also comply. Waste pickers will likely be exempted, except for copper scrap and waste metal.
Enhanced registration requirements
“Registration as scrap and waste metal buyers and sellers will only be granted to businesses that have a satisfactory Tax Compliance Status.” read the gazette.
Enhanced reporting requirements
An input-output reporting system via the Metal Trading System will be implemented for purposes of compliance monitoring and for monitoring exports of scrap and waste metal and semi-finished products.
This system will require monthly electronic reports from scrap and waste metal dealers, detailing purchases and sales by volume and value to International Trade Administration Commission.
Reports will include specific details like purchase date, metal type and grade, tonnage, total cost, and seller’s business registration or individual identity number.
Include semi-finished metals in the registration regime
Semi-finished metal products will be included in the registration regime under the SHGA, ensuring both buyers and sellers are registered.
Requirement for registered buyers to purchase only from registered sellers
Registered buyers can only purchase copper scrap, waste, semi-finished, and finished copper products from registered sellers, restricting sales to registered entities or persons.
“The effect of this would be that all sales of scrap, waste, semi-finished and finished copper products will be prohibited other than between registered entities or persons,” read the gazette.
Scrap metal theft hurting South Africa’s infrastructure
Various crucial entities in South Africa have been severely hampered by scrap metal.
As an example, state-owned power utility Eskom is phasing out the use of copper cables due to high levels of theft of the item.
According to a report by the Global Initiative Against Transnational Organized Crime (GI-TOC), stolen copper cables, overhead lines, copper used in conductors, and copper stored for later use cost Eskom between R5 billion and R7 billion a year, plus about R2 billion to replace them.
“We are moving away from using copper because we have seen that it is quite in demand, so whenever we have any cable that has been stolen, we do not replace it with copper,” Gauteng Eskom spokesperson Amanda Qithi told the SABC.
The mineral, the second-best conductor of electricity behind silver, is in high demand – especially among criminal syndicates.
The sought-after metal is widely used in various sectors, including water, rail, fuel and oil, communications, electricity, military, health, vehicle production, and more.
“Consequently, there will always be a market for it, and thieves find ready sources of the metal in South Africa’s poorly maintained and guarded national infrastructure,” said Corruption Watch.
In hopes of deterring this massive issue for public infrastructure, in 2015, the legislature enacted the Criminal Matters Amendment Act, which could see perpetrators sentenced to 30 years and private companies fined R100 million for tampering, damaging or destroying critical infrastructure.
However, according to GI-TOC, this has not deterred copper thieves, who largely fall into two categories – organised crime syndicates who commit large-scale theft and petty or subsistence thieves who steal only what they need.
According to GI-TOC researcher Jenni Irish-Qhobosheane, corruption plays a big role in the growth of illicit copper networks and markets.
“This can range from employees using their access and position to facilitate the theft of copper to employees or security officers being paid by syndicates to provide information or, in the case of security officers, to assist criminal actors in safeguarding their operations,” she said.
Comments and gazette
The draft regulations can be found here.
Members of the public and interested/affected parties are invited to submit their written representations and comments regarding the Draft Regulations by 11 August:
(i) Emailing comments to [email protected];
(ii) Posting comments to Civilian Secretariat for Police Service at Private Bag X 922 Pretoria, 0001. For the attention of Mr Milton Ntwana.
Read: New state-owned company for water in South Africa coming in 2025
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