The South African National Treasury has announced, on Monday, its recommendations for an export tax on ferrous and nonferrous scrap, in order to support domestic consumers and reduce unfair trade practices allegedly being followed by exporters. A Davis Index source, however, said this export tax could be levied only after Dec 2020.
The treasury has proposed ZAR1,000/mt ($61.2/mt) as the new export tax for ferrous scrap and stainless-steel scrap.
The new export tax for red metals, such as copper and brass will be be ZAR3,000/mt; and ZAR1,000/mt for aluminium scrap.
Other waste and scrap metals being exported will be liable for a tax of ZAR1,000/mt.
A new policy on the export of ferrous and nonferrous scrap metal will be effective March 31, the National Treasury and Department of Trade and Industry, said.
The government has invited written feedback on the tax proposal through April 2020, and a second round of consultations will be held mid-July, investigating possible legislation to define specific export tax levels.
The International Trade Administration Commission of South Africa (Itac) has also proposed that an export duty on metal waste replace the country’s current price preference system (PPS).
South Africa hit a record high of 1.78mt of ferrous and stainless-steel scrap exports, after which, in 2013, the PPS system was introduced to facilitate discounted raw materials to South African consumers at a rate of 20-30pc of the export price.
This system was renewed in 2018.
Though South African total metal scrap exports dropped after implementation of the PPS system in 2013, domestic consumers, processors, and recyclers of metal scrap have been negative about the system in the metal industry value chain, with claims that it failed to fulfil domestic steelmakers’ demand for metal scrap.
In the country’s 2019 budget, it was announced that the PPS would be replaced by an export tax on scrap metal exports after March 31, 2020.
The export tax would apply to all countries except those with trade-agreement exemptions.
Under the current South Africa-EU economic partnership agreement (EPA), scrap metal exports to European Union (EU) member countries would be exempt from duties.