Cape Town company fined R150K for illegally exporting scrap metal

A Cape Town-based export company has received a hefty fine for illegally exporting scrap metal without a valid export permit.

The export of scrap metal is strictly controlled in South Africa, mainly to prevent infrastructure theft and ensure local consumers have access to higher-quality and affordable scrap.

However, several industry players have in the past and more recently questioned government interventions and their success in preventing infrastructure theft and providing “affordable” scrap to local mills and foundries.

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In the latest case, the International Trade Administration Commission (Itac) took Scrapmania and its director, Joseph Hurling, to task for exporting 20 containers of scrap metal without a valid permit. 

Itac accused Scrapmania of failing to insert container numbers on the prescribed customs documentation, as required by Itac export control guidelines.

Guilty plea

The case against the firm was opened in September last year in the Eastern Cape. The company was charged with contravening the provisions of the International Trade Act.

This week, the company pleaded guilty and was fined R150 000. The matter against its director was withdrawn.

This is not the first time the company has collided with the authorities.

Two years ago, the company also had a scrap with the South African Revenue Service (Sars) for making a false customs declaration. The company also pleaded guilty when the matter ended up in court. In that matter, it was fined R500 000, and Hurling received an additional R100 000 fine.

Itac says in a statement the strict regulation of scrap metal exports is crucial when the incentive to export scrap, particularly when international prices surge upwards, may trigger “domestic security of supply challenges”. 

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This comes at a great cost to local investment and employment in the foundries, mills and other consuming firms downstream.

“The measure is to also ensure that mills and foundries become cost-competitive and attract further investment, creating employment, and supporting industrialisation,” it adds.

“The Itac enforcement unit, working with the relevant stakeholders including Sars customs, the SAPS [South African Police Service] and Department of Justice, continue to make in-roads in curbing the illegal importation and exportation of restricted and prohibited goods into and out of South Africa.”

Several measures

The industry has been subjected to several measures in the past to combat infrastructure damage and scrap metal theft.

Not everyone is convinced that the measures are effective.

At one stage, the industry was subjected to three different measures simultaneously:

1. The price preference system (PPS) introduced around 2013;
2. Export duties introduced around 2020; and
3. An export ban on ferrous and copper scrap metals introduced by the Department of Trade, Industry and Competition (dtic) in November 2022, then extended for another six months.

The latter measure aimed to combat copper and ferrous metal theft by eliminating a market for stolen goods and lowering prices to discourage theft. 

Government views vandalism and theft of public infrastructure as a great risk to the country.

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The economic damage of copper theft alone has been estimated at more than R45 billion annually.

This was a finding in research commissioned by the dtic from an independent research team from Genesis Analytics.

Long-term view 

Seifsa, the industry body representing the metals and engineering sector, questioned the efficacy of the measures. It encouraged the dtic not to take a narrow and short-term view on the way forward regarding scrap metal regulations. 

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In a statement earlier this year, after the second export ban ended, it said the government should consider the broader consequences of the decision and what is best for the industry in the long term.

Seifsa reiterated its commitment to work with government more broadly in the development of an industrial policy framework that is sustainable and conducive to the growth of the industry. 

This article was republished from Moneyweb. Read the original here