The PPS prohibits the export of scrap metal unless it has first been offered to the scrap consuming industry at a substantial discount. If local buyers make an offer at the PPS price of more this must be accepted.
PPS was due to be replaced by an export duty on scrap metal from 1 August 2021. So said National Treasury last year. So said ITAC. Not so says Ebrahim Patel. The DTIC wants to extend the PPS for another 2 years on top of the export duties. I have no idea where the recyclers will make their profit.
Is it a good idea to have both PPS and export duties?
Where does this idea come from?
Good question. According the gazette notice, on 9 February 2021, the Steel and Metal Fabrication Masterplan 1.0 was adopted. The gazette then says:
“As part of the Masterplan working group on scrap metal, involving key stakeholders from across the industry was established to which, if any or all, of the [PPS] Policy Directive should remain following commencement by SARS of the export tax on ferrous and non-ferrous scrap metal. The working group has recommended to the Minister that the Policy Directive be extended for a further long-term period to provide policy certainty for the downstream beneficiation industry.“
It is not clear which stakeholders represent the metal recycling sector, given they have no seat around the Masterplan table. And the downstream beneficiation industry has perfect policy certainty in the form of the export duties, so it’s not clear why they need to have their cake and eat it along with everyone else’s.
The Masterplan says “discussions between government and scrap dealers and consumers of scrap have been held to consider measures which can drive local beneficiation of scrap, while supporting the sustainability of the recycling industry.” The Metal Recyclers Association is the representative body for the recyclers, yet they have not been consulted at all and it is not clear how forcing a pricing discount and increasing their taxes improves their sustainability.
The Masterplan acknowledges that the recycling sector is a large employer and must remain viable, but makes no attempt whatsoever to explain how this will happen with PPS being applied on top of the export tax.
All of this leads us to where we are now. Ebrahim Patel wants to extend the PPS for another 2 years “to support the export tax and to enable consideration of the implication of having both systems in place to support the availability of affordable scrap for the domestic consuming industry.”
The export duties will be imposed on 1 August 2021. No explanation is given for why it took 4.5 months to publish the intention to add PPS to the export tax and then only give interested parties 2 weeks to respond.
Concerned by this and want to respond? You have until 8 July to let the DTIC hear your views.
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