Ban of scrap metal: Informal traders to be hardest hit

File picture. Picture: Timothy Bernard African News Agency (ANA)

File picture. Picture: Timothy Bernard African News Agency (ANA)

Published Dec 6, 2022


Johannesburg – New rules ratified by the government banning cash transactions in scrap-metal trading and the suspension of the export of certain types of scrap have received wide acclaim from various sectors of business and public entities.

According to the new rules, the traders will be required to acquire a license to allow them to deal in copper and scrap metals, all this to curb the R47 billion loss suffered by the country due to the illicit or unauthorised trade in scrap metal.

The Passenger Rail Agency of South Africa (Prasa) celebrated the move, and according to Prasa CEO Hishaam Emeran the new rules would go a long way in significantly decreasing the vandalising and destruction of it’s infrastructure.

“It will bolster Prasa’s ability to provide safe, reliable, affordable, and efficient passenger train services,” Emeran said.

“The theft of metal and copper cables sold to the industry has had a debilitating impact on Prasa.”

There are many positives that will emanate from the regulations, but what does it mean for those who trade in metal?

Scrap metal recycling can be very lucrative for would-be entrepreneurs with some scrap metals fetching round R65/kg.

IOL reached out to the Metal Retailers Association (MRA) to get their impression on the new rules, and how they would affect small business and informal traders.

The MRA is opposed to the regulations in their current form, and does not believe all stakeholders were sufficiently consulted in the drafting of the new measures.

Q: What does the MRA make of the government’s plans for a six-month ban on exporting scrap and waste metal?

A: We oppose the measure, and have reservations that it may be extended beyond the envisaged six-month period. The MRA does not support the ban… We believe it is a blunt mechanism and will not achieve the desired objectives.

This is a policing issue, not a policy issue. The MRA does support some of the initiatives, like the banning of cash-for-scrap sales, but these are low down on the government’s priority list.

Q: How will this ban affect the livelihoods of business owners and SMEs?

A: It will substantially (decrease) revenue derived from scrap metal sales and potentially threaten the sustainability of certain metal-recycling activities. Not only will this ban negatively affect business owners and SMEs, the hardest felt would be the informal traders (the poorest of the poor).

There is an estimated 300 000 participants, whose primary income is derived from the collection of scrap metal. The day after the ban was announced, the local consumers dropped their pricing by R650pmt – 20% which will be passed down to those who need it most.

Q: The government will require traders in copper waste and scrap metal to be registered, what is the MRA’s position on this?

We support any measure that enhances policing, but we have not been consulted on this proposal. The MRA’s members are already highly regulated by an effective policy, namely the Second-Hand Goods Act of 2009.

Q: What recommendations would the MRA make to the government on how to go about approaching the issue?

A: Engage in meaningful consultation with recycling-sector representative bodies; immediately ban the use of cash for scrap metal and/or semi-finished metal transactions; immediately implement export controls on semi-finished copper products; sustain a high level of policing going forward. Engage with all industry role-players to come up with equitable and sustainable solutions.

[email protected]

IOL Business