Scrap metal ‘unaffordable’

THE scrap metals industry has a complex and often adversarial relationship with the foundries industry. Many countries impose duties to prevent exports of scrap metals, while also heavily subsiding their metals industries, despite World Trade Organisation rules.

But South Africa has gone in the opposite direction since 1994, liberalising markets to the point that some in the private sector are pleading for protection, though others are baying for more open markets.

Bob Stone, chairman of the Non-Ferrous Metal Industries Association of South Africa, says inputs for metals producers, especially scrap metals, are not affordable.

Apart from tariffs, antidumping duties and subsidies elsewhere, market inequities are driven by high foreign demand and a highly favourable exchange rate for scrap exporters, which also charge local buyers export parity prices.

The Metal Recyclers Association of South Africa declines to comment — it is sensitive to accusations that it is involved in metals theft and that it is ignoring a government directive to offer product to local foundries and secondary smelters at a 20% discount to the international spot price.

The International Trade Administration Commission says it will soon issue new guidelines for the compulsory sale of ferrous and nonferrous scrap metals to the domestic market to stem exports worth billions annually.

John Davies, CEO of the South African Institute of Foundrymen, says the foundry industry remains under pressure.

“However, if we can get the localisation programme really working well, it could provide impetus to the industry and make a real difference,” he says.