You might be reading this article after the May 23 deadline for comments on the ‘Price Preference System (PPS) Discount on Ferrous Scrap’. But this does not mean you should stop reading. Instead, consider how the proposed change could affect you – adversely or otherwise – and stay engaged.

In the Government Gazette of May 8, the International Trade Administration Commission of South Africa (Itac) announced that it was investigating whether the 30% discount level for ferrous scrap metal should be amended.

Back in February 2012, the then Economic Development Minister, Ebrahim Patel, published a Government Gazette notice prescribing that certain goods, including ferrous and nonferrous waste and scrap metal may not be exported from South Africa unless the exporter has been granted a permit by Itac.

Subsequently, in May 2013, the Minister issued a trade policy directive to Itac, instructing it to exercise its powers to regulate the export of scrap metal in line with the policy contained in the directive. The objectives of the directive are, among others, to regulate exports to ensure an affordable supply of high-quality scrap metal, an essential material for the South African processing industry; to safeguard employment; and to not only maintain but also increase industrial capacity to promote infrastructure development.

In accordance with the directive, Itac established a PPS in terms of which it prohibits the export of certain types of scrap metal unless the scrap has first been offered for sale to the domestic consuming industry at a price discount to an international benchmark price, among other conditions.

The discount and other administrative aspects of the PPS are set out in the guidelines published in the Government Gazette on September 28, 2018, and have been amended over the years.

On April 15 this year, Trade, Industry and Competition Minister Parks Tau issued a directive in which he noted the challenges being alleged by the integrated steel value chain and directed Itac to exercise its authority under the Act to “investigate as a matter of urgency whether, in light of the alleged challenges being faced by the integrated steel value chain, and taking into account any other relevant factors, the current level of the PPS discount on ferrous scrap (at 30%) requires modification”.

The Minister further noted that the focus of the Itac investigation would be on “the PPS discount on ferrous scrap (at 30%) alone and keeping all other export control elements under the PPS the same”.

Additionally, Tau instructed Itac, in line with the Department of Trade and Industryʼs commitment to transparency and stakeholder engagement, to allow interested parties to “submit their comments and concerns”. He also directed that, subsequent to the conclusion of its investigation, Itac provide notice of any change in the level of the discount and the reasons for offering the discount. This would be implemented only after Itac made a recommendation to the Minister informed by the results of its investigation and the Minister decided on the matter.

The intention of the Government Gazette notice is to ensure that affected stakeholders, such as industry representatives, trade bodies and the general public, have an opportunity to submit comments. But why a period of only two weeks is allowed for comment is an obvious question that arises, considering that applications tend to be published for four weeks.

In the notice for comment, Itac requested interested parties to provide “well-informed responses with evidence and perspectives”, which should include, but not be limited to, the alleged challenges faced by the integrated steel value chain and how the current discount level is impacting on this sector of the economy; how the current level of the discount is impacting on other sectors of the economy, including recyclers, foundries and mini-mills; how and whether the increase in the level of the discount from 20% to 30% has impacted on the availability of scrap metal; and what discount level would be more appropriate than the current 30% discount, as well as the rationale for a different discount level. Itac also encouraged respondents to provide data, case studies, and commercial experience as substantiation of their comments.