South Africa amends price system for scrap metal to aid industry

South African authorities have amended the pricing system of scrap metal following complaints from the steel and other metal-producing sectors, the trade ministry said on Monday.

The ministry had been told by the metal industries that the system was harming their business and constraining their recovery from the effects of the Covid-19 pandemic.

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The key changes to the price preference system (PPS) include the imposition of an additional discount of 10% when domestic buyers are located in inland provinces and scrap metal is located at the coast, to account for transport costs, it said.

Domestic buyers will also have the right to weigh and inspect the material to “ascertain that material delivered is the same quality, type and weight as agreed to when the offer was made and concluded, and the right to claim reasonable compensation for costs incurred” if that is not the case.

These changes, made by the International Trade Administration Commission of South Africa (ITAC), will take effect on October 2.

“The amendments to the guidelines are intended to improve the domestic consumers’ access to affordable scrap metal and address the concerns raised by the industry in the interim period,” the ministry said.

In July, Ebrahim Patel, minister of trade, industry and competition, called on the ITAC to explore measures which could help support the metals industry, which was suffering from price increases for scrap.

The pricing system was introduced in 2013 to promote the affordable supply of scrap metal to South African buyers, by requiring scrap dealers to first offer scrap domestically at a prescribed discount to international prices, before it could be exported.

The ministry also said the introduction of an export tax was under consideration.

The scrap metal industry contributes R15 billion ($906 million) to South Africa’s gross domestic product and employs about 350 000 people.

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