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ConCourt ends four year scrap metal legal battle

Aug 14 2017 18:44
Lameez Omarjee

Johannesburg – A four year legal battle regarding the steel trade has come to an end.

The Constitutional Court has dismissed an application by the SA Metal Group, which sought to appeal a ruling regarding its challenge against the state’s scrap metal export provisions as well as the International Trade Administration Commission’s (ITAC) decision to refuse it a permit. The application was dismissed on the grounds that it had no reasonable prospect of success.

The Metal Recyclers Association and SA Metals Group had brought cases before the high courts in Gauteng and Western Cape, before going to the Supreme Court of Appeal and ultimately the Constitutional Court. In all cases brought forward, the courts ruled in favour of the state.

According to a statement issued by the Department of Economic Development, the legal action was launched after the ITAC was required by the department to administer a price-preference for local foundries and steel mini-mills on scrap metal collected locally, before it could be exported.

This department’s policy directive was intended to promote local industrialisation and the beneficiation of local scrap metal, given major job losses and de-industrialisation in the industry. The policy directive was to support the national infrastructure plan and lower carbon emissions as using scrap metal to make steel products requires less energy than iron ore.

Economic Development Minister Ebrahim Patel said that the ruling supports government’s efforts to promote job creation and industrialisation. “Our Constitution enables government to intervene in support of legitimate public purposes. Government will act to ensure that our industrial base and employment are supported,” he said.  

“Prior to the Trade Policy directive, we saw a significant increase in export of the raw material to the detriment of local industry,” he explained. For example ferrous scrap metal exports increased by 340% between 2003 and 2012, and the rand value increased by 1060%.

“Since the introduction of the Trade Policy directive, export levels dropped and local foundries and mini-mills reported an improvement in the supply of scrap metals,” he said.

Patel said that since the policy directive had been issued  it has been apparent that some companies were trying to evade provisions by reclassifying their exports. Government is looking into addressing this by taking action against transgressors.

Fin24 previously reported that the department introduced a R1.5bn Steel Industry Competitiveness Fund, administered by the Industrial Development Corporation (IDC). The fund is targeted at small and medium enterprises, including those with a maximum annual turnover of R450m.

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