Seifsa urges dtic not to extend scrap metal ban

The Steel and Engineering Industries Federation of Southern Africa (Seifsa) says it has noted with concern submissions by other entities to the Department of Trade, Industry and Competition (dtic) calling for the extension to the scrap metal export ban which is scheduled to come to an end in December.

“Seifsa’s position has always been that the scrap metal export ban is misguided in . . . that it is attempting to solve . . . infrastructure damage for scrap metal theft. It is an extremely blunt measure with unintended industrial policy consequences.

“More worryingly, it communicates a very poor economic signal by not taking into account a total steel perspective,” Seifsa president Elias Monage says.

The federation says discussions are beginning to lean toward the export ban being used as an industrial policy instrument to support scrap-based mills and the country’s decarbonisation efforts, which was never the original motivation for the ban.

“The initial intention was always security-related aspects and to attempt to limit the damage to infrastructure, with other considerations – whether noble or adverse – being ancillary to the core issue.

“If it is the intention of the dtic to introduce a new industrial policy regime, then the economic signalling should have been communicated as such and developed, with industry, taking the total steel sector perspective into account,” Monage comments.

He adds that the scrap metal export ban creates a disproportionate and policy-induced – not producer efficiency-driven – input cost advantage “that is afforded to only a select group of producers where scrap metal is used as an input”.

Seifsa states that, in the absence of a mechanism similar to a price preference system on iron-ore that attempts to level the playing field, pockets of the value chain are rendered uncompetitive, relative to the beneficiaries of the scrap metal ban.

It adds that there is also no regulatory mechanism that ensures this input cost advantage is passed down the value chain, “which again renders the intervention extremely narrow in its perceived benefits”.

Seifsa states that the ban also presents World Trade Organisation contraventions and anti-competitive behaviour from a predatory pricing point of view.

“Given all the negative consequences accompanying the scrap metal export ban and the fact that it is not working, Seifsa strongly urges the dtic not extend the scrap metal export ban beyond December,” says Monage.