South Africa to consider scrap metal export tax

South Africa is considering an export tax on scrap metal to provide domestic consumers with better quality raw materials.

The South African National Treasury announced on 11 March a call for written comments on the proposal. The treasury is considering the taxes to alleviate pressure from unfair trade practices on domestic metals industries.

The suggested tax rates include R1,000 ($61.20)/metric tonne (t) for ferrous and stainless steel scrap, R3,000/t for red metals such as copper and brass, and R1,000/t for aluminum scrap. The treasury also proposed R1,000/t for other waste and scrap metals.

South Africa's annual exports of ferrous and stainless steel scrap amounted to almost 525,000t in 2019, according to Global Trade Tracker data. Nonferrous scrap exports registered at nearly 71,000t of aluminum scrap, and 8,000t of copper, brass, and bronze scrap.

The country's export levels peaked in 2012 when the country exported 1.78mn t of ferrous and stainless steel scrap, alongside 47,000t of aluminum scrap and 74,000t of red metal scrap. Exported scrap metal tonnages have steadily decreased in following years.

The government is inviting comments through April 2020 on the goals, implementation method, and expected impacts of such a tax. A second round of consultation will begin in mid-July, investigating possible legislation to define specific export tax levels. That round will conclude at the end of August.

If implemented, the tax would replace the current export guidelines established by the South African International Trade Control Administration.

The current guidelines, written in 2013, established a system where domestic consumers, processors, and recyclers could acquire scrap at preferred prices compared to the listed export permit. Local consumers are given first option for purchasing.

In the event local consumers showed no interest in purchasing after 30 days, the exporter would then be permitted to ship the scrap.

The current guidelines are in effect until 31 March.

South Africa ranked 25th in global crude steel production with 6.3mn t of output in 2018, according to international industry organization Worldsteel. In that year, the country was a net exporter of 1.8mn t of steel products.

By Will Ehrhardt

South African scrap metal exports ’000t