Following hot on the heels of the announcement by ITAC of further restrictions around the export of scrap metal, Minister Patel published a proposed extension of the policy directive which gave rise to the preferential pricing system (PPS). If you want to better understand this, please click here to read my blog post on PPS. Comments are due on the original PPS gazette by 4 December 2020.

The new proposal is to extend PPS to 30 June 2021 (for now), which means for the period from 1 April to 30 June 2021, there will be both PPS and export duties. The reason given is: The Minister is considering extending the [PPS] Policy Directive… to allow for the finalisation of the process of reviewing PPS and to enable consideration of the implication of any export tax on the future of the [PPS] Policy Directive.

This has far-reaching implications, as PPS has the effect of forcing a discount into domestic sales and now, even if there are no local buyers, the recycler would also face an export duty. There is also no indication of what will happen at the end of June 2021. Will the PPS be removed? Will it be extended? If we look at the export ban instituted on 3 July 2020, this was meant to be in place for 2 months and ended up being extended to 3 months.

The squeeze being applied to the metal recycling sector will simply see the cheaper scrap not being collected and the small recyclers going out of business or being bought up by the bigger companies.

Interested parties have until 7 December 2020 to comment.

Contact us on info@xa.co.za if you need to know more.

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