The International Trade Administration Commission of South Africa (Itac) has taken legal action against three companies that it says attempted to export scrap metal and copper ingots without valid export permits or in violation of permit conditions.

The Durban Regional Court issued fines to the three companies on September 6 following their admission of guilt.

The three scrap metal trading companies involved in the case, which entered a plea and sentence agreement, included two Insimbi Group subsidiaries Amalgamated Metal Recycling and Group Wreck International Non-Ferrous, alongside Cayo Largo Holdings.

All three companies confessed to the allegations outlined in their respective charge sheets and acknowledged their contravention of the International Trade Administration (ITA) Act. The businesses hold licences as metal recycling merchants, primarily engaged in collecting, sorting, processing, recycling and selling recycled metal.

Under the ITA Act, Itac possesses the authority to issue import and export permits, specifying various attributes of goods, such as type, quantity and value, that can be imported or exported from South Africa. Scrap metal and copper ingots fall within the category of products subject to permitting.

At the time of the contravention, the sale of specific scrap metals was subject to Itac export permit control and the price preference system (PPS). Introduced in 2013, the PPS is aimed at ensuring the affordable supply of scrap metal to domestic steel and metal manufacturers by requiring scrap dealers to offer scrap to the domestic consuming industry at a prescribed discount to international prices before considering exports.

Recycled metal that can not be sold locally under the PPS can be exported with the appropriate Itac export permit. Additionally, the exportation of copper and copper alloy ingots is subject to Itac export control measures, primarily to prevent the smelting and export of stolen infrastructure.

The three respective companies initially applied for the necessary permits after offering scrap metal and ingots on the local market, with no takers. Subsequently, they obtained export permits, sourced foreign buyers, and arranged logistics and shipping for the sales.

However, all three companies admitted that their export permits were no longer valid when the containers were entered into the customs export stacks for shipment.

Consequently, the presiding officer Anand Maharaj found the companies guilty of contravening the ITA Act, as they failed to apply for new or revised permits at the time of export.

Insimbi Group CE Fred Botha confirmed to Engineering News on September 11 that three containers belonging to the group’s subsidiaries due for export were seized by Itac at the Durban port.

He claimed that permits for the containers had been applied for and issued by Itac, while export duties had also been paid on the material being exported under said permits.

However, owing to various delays and logistical issues beyond the group’s control, the export of the containers was delayed, whereupon the export permit lapsed before the material could be shipped.

“This was a technical infraction. However, all PPS procedures were adhered to, all export duties had been paid and the State accepted that there was no intended malice,” Botha explained.

He said the group’s subsidiaries have cooperated fully with the authorities and that the plea agreement was concluded specifically on the understanding that none of the companies benefitted from the technical contravention and that the containers have subsequently been released.

This contradicts the Itac’s statement, which claimed that all three companies had admitted to benefiting from the proceeds of what Itac has described as illegal activities and therefore consented to three separate orders issued under the Prevention of Organised Crime Act.

The court's orders for each company are as follows:

Amalgamated Metal Recycling was ordered to pay R250 000 into the Criminal Assets Recovery Account.

Group Wreck International Non-Ferrous was ordered to pay R1-million into the Criminal Assets Recovery Account.

Cayo Largo Holdings was ordered to pay R250 000 into the Criminal Assets Recovery Account.

“We are fully committed in the struggle to ensure that the illegal trade of recycled metals is stamped out,” Botha said.

Engineering News tried to contact Cayo Largo Holdings for comment but the company’s representatives could not be reached at the time of going to print.