Criminals are stealing South Africa one piece at a time – but government has a plan

The Department of Trade and Industry and Competition (DTIC) has gazetted the final plan of action to regulate and restrict the trade of scrap metal in South Africa, which includes a temporary six-month ban.

The plan, which was published for public comment in August 2022, was developed in response to increased criminality in the scrap metal value chain – particularly with the theft of copper and other metals, which are aggressively chipping away at the country’s public infrastructure.

Key state companies like Eskom, Transnet and Prasa have suffered greatly from this criminality, with copper theft being one of the biggest drivers of localised blackouts and the theft of rail infrastructure effectively collapsing South Africa’s rail networks.

According to the DTIC, citing research from the Trade and Industrial Policy Strategies and Genesis Analytics, copper theft from the country’s rail network and electricity grids carries an annual economic cost exceeding R45 billion in 2020/2021.

The department said that stolen copper, steel and other metals go through several processes and are mainly exported across borders as scrap metal. Scrap metal is a legitimate trade in the country, making it difficult to track illegal trade and exports.

Criminals are able to easily conduct their black market businesses because it’s cheap to import furnaces to transform the metals, and there is no formal permit or registered trader regime in place to identify the legitimate sellers from the dodgy ones.

In its final plan of action, the DTIC will implement a six-month ban on the trade of scrap metal, while it works to build new and boost existing permit systems. The plan will take place in three phases:

Under phase one of the plan, the following will take place:

1. There will be a prohibition on the export of copper waste and scrap metal for a period of six months
2. There will be a prohibition on export of ferrous waste and scrap metal and remelting ingots of iron or steel for six months, with exceptions for stainless steel and ferrous waste and scrap metal generated in the ordinary course of business as a by-product of a manufacturing process.
3. There will be no export prohibition on scrap metal containing various other metals, but rather a continuation of the export permit system for waste and scrap metal already subject to export control, including stainless steel and other ferrous waste and scrap metal excluded from the export prohibition. Waste and scrap of cobalt, bismuth, titanium and zirconium will not be  subject to the export permit system.
4. There will be an extension of the permit control system for semi-finished metal products to include additional semi-finished metal products, including some that were initially included in the draft export prohibition notice.
5. Permit controls will be introduced for imports of furnaces and ovens for the heat treatment of ores, pyrites or metal, as well as granulators, guillotines, shredders and other devices used to change the form of waste and scrap metal.

Phase 2 and phase 3 of the plan deal with regulatory changes and enhanced enforcement of the permit system. One of the bigger changes between the draft and final documentation is the exemption of waste pickers from the crackdown on scrap metal – except for copper.

Exports of ferrous waste and scrap metal will be temporarily prohibited, but exceptions will be allowed, the DTIC said.

“Ferrous scrap metal will be subject to the six-month export prohibition but, unlike in the case of copper, exceptions will be made for stainless steel and ferrous waste and scrap that is produced in the ordinary course of business as a by-product of a manufacturing process.”

“Copper theft has a devastating cost to society; accordingly, no exceptions are provided for the regulatory regime governing copper.”

The export prohibition in phase 1 is anticipated to last for six months from the date on which the prohibition is imposed.

Work on the amendments to existing regulations has commenced and could be gazetted between phase 1 and phase 2, the department said. The legislative action called for in phase 3 may take up to 24 months to finalise, starting from the launch of phase 1, it said.

The Passenger Rail Agency of South Africa (Prasa) has welcomed the ban, saying it would significantly improve its ability to run trains and protect the rail infrastructure.

“The theft of cables and metals has badly damaged our network. It is more than theft, it is sabotage of economic infrastructure,” Prasa’s Acting Group CEO Hishaam Emeran said on Wednesday.

Prasad said the ban on trade in scrap metal would make it more difficult for thieves to ransack the passenger rail assets.

“Our focus should be on running passenger trains, not spending billions to protect our network. We support this policy wholeheartedly as it will significantly boost our ability to run our trains and protect our infrastructure,” it said.

Read: Government’s new plan to crack down on copper theft in South Africa