Government today announced details of targeted measures to address the theft of public infrastructure for resale as scrap metal that causes more than R47 billion damage annually to the economy. The measures involve prohibition of export of scrap copper and ferrous metal for a six month period, which will be followed by a system to regulate trade in such metals.
In future phases, new measures will be introduced including prohibiting the use of cash in copper and scrap metal transactions, following legislative amendments; and limiting exports to a defined number of ports of exit.
These measures were considered and approved by Cabinet on 16 November 2022, as part of a comprehensive package of measures to address the damage caused by metal theft to public infrastructure, the economy and communities.
Announcing the measures this morning, four Cabinet members outlined the rationale for the measures. The Minister of Public Enterprises, Mr Pravin Gordhan noted that cable theft had resulted in a R2bn loss in revenue for Transnet in 2021 while about 742 kilometres of Eskom cable had been stolen leading to significant additional electricity disruption. The Minister of Police, General Bheki Cele indicated that 20 multi-disciplinary Economic Infrastructure Task Teams had been established since June 2022 and were fully operational with over 3,000 operations and 1,946 arrests in the course of 2022.
Minister in the Presidency, Mr Mondli Gungubele highlighted the high-level of coordination across Government and stated that "we have begun to turn the tide of criminal behaviour that holds back our struggling economy, with these measures the economy will begin to recover".
Prior to the measures being approved, an earlier draft was published containing specific recommendations.
Over two thousand eight hundred (2,800) comments were received on the draft policy from across society, including business, industrial associations, organised labour, State Owned Enterprises (SOEs), Government departments, and individuals. Extensive comments were received from stakeholders within the metal sector, the mining sector, downstream manufacturing, and other parts of the economy.
Minister Patel noted that "South Africa has an extensive network of electricity and Telkom cables, rail tracks and rail cables, and municipal infrastructure such as traffic lights and draincovers. It is practically impossible to police all of this infrastructure, all of the time. The measures approved by Cabinet, therefore seek to reduce the demand for scrap metal from the lucrative global market, while simultaneously disrupting criminals' transport and logistics networks."
In Phase 1, three key interventions to be implemented:
First, Government will impose a 6-month temporary prohibition on all waste and scrap copper and copper alloy exports and ferrous waste and scrap exports. Limited exceptions will be allowed for ferrous waste and scrap exports.
Second, a permit system which will be administered by the International Trade and Administration Commission (ITAC) will apply to semi-finished copper exports.
Third, import controls through a permit system will be instituted for furnaces and other scrap transformation machinery.
Minister Patel noted that "these measures are particularly restrictive for copper and copper alloys as the theft of these metals impose enormous damage on the South African economy".
In Phase 2, Government will introduce measures requiring buyers and sellers of scrap metal to show that they are tax compliant and have all the necessary environmental permits in place before being issued with buyers or sellers licences. These companies will also have to show where the scrap metal originated from and to whom it was sold.
The measures will ensure that the Police Service can focus its enforcement resources on companies not complying with the measures instead of spreading its valuable resources across thousands of public infrastructure sites, individual scrapyards and recyclers. In addition, Government may also limit metal scrap and semi-finished exports to a limited number of ports which will assist SARS to inspect more containers for illegal and mis-labelled metal exports.
In Phase 3, Government will consider making amendments to pertinent existing legislation, or pass new legislation, to create a dedicated metal trading licensing regime. This may include prohibiting the use of cash in transactions involving waste, scrap and semi-finished metal products.
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Minister Patel expressed his gratitude to companies, industry bodies, individuals, community representatives and workers who took the time to respond to the draft policy measures and provide constructive inputs. He also called upon communities, businesses, individuals and workers to work with Government to identify illegal scrapyards and recyclers and to report criminals involved in public infrastructure theft.
Minister Patel expressed his gratitude to companies, industry bodies, individuals, community representatives and workers who took the time to respond to the draft policy measures and provide constructive inputs. He also called upon communities, businesses, individuals and workers to work with Government to identify illegal scrapyards and recyclers and to report criminals involved in public infrastructure theft.
Members of the media are directed to the Background Note: Scrap Metal Measures issued by the DTIC earlier today which contains a detailed description of the measures.
