Debate surrounding South Africa’s scrap metal policy is shifting, as new data and expert commentary re-evaluate claims that the Preferential Pricing System (PPS) and scrap export tax are allegedly harming the sector.
This week, industry leader Ebrahim Khan of the GeT Metal Group pushed back against what he describes as incorrect and misleading narratives being circulated by traders of metal and certain commentators supporting this anti-industrialisation narrative.
A growing number of global analysts appear to agree. International steel and recycling specialist John Browning, writing for Fastmarkets, has repeatedly emphasised that countries retaining scrap domestically gain long-term industrial strength, pricing stability and lower carbon intensity.
In a 2023 market note, Browning wrote:
“When domestic scrap is diverted into local furnaces instead of being exported, it strengthens national industrial ecosystems. Export-heavy scrap economies often experience volatility, under-investment and weakened manufacturing resilience.”
His assessment directly supports several of the concerns raised by local circular economy operators.
Challenging the Numbers
Recent cost claims circulating in public debate were described by Khan as “commercially irrational and factually incorrect.”
He pointed to a widely repeated assertion that 45 000 tonnes of scrap cost R600 million, implying more than R13 300 per ton and rejected it outright.
“If someone claims to be paying more for scrap than for rebar, the numbers simply do not add up. No one in South Africa pays rebar prices for scrap,” Khan said.
He added that such figures are “a mathematical fiction.”
Inter-Provincial Movement of Metals
Assertions that scrap dealers can deliver ferrous scrap inter-provincially at their own cost are unrealistic. As Khan notes, this is why a one size fits all policy, where a Cape Town foundry can block a Johannesburg exporter, makes no economic sense for low value ferrous scrap.
The distance alone renders such trades unattractive.
Non-ferrous metals, with far higher value, operate differently and can absorb long haul costs. Policy must therefore differentiate between these categories and avoid forcing unviable interprovincial movements.
Quality Standards Are Normal Practice
Confusion around supposed punitive quality fines was also addressed by Khan, who clarified that quality compliance is standard practice.
“Scrap is a raw material. Like any raw material, it must meet global ISRI specifications,” Khan said. The ISRI framework has guided international recycling standards for more than 40-years.
Evidence That PPS and Export Taxes Are Working
New data suggests that PPS and the export tax have delivered measurable gains for South Africa’s circular economy. According to internal industry figures and independent sector estimates:
- Used beverage can prices have risen from R14 000 to more than R28 000 per ton
- Prices now exceed PPS benchmarks by more than R10 000 per ton
- Domestic beneficiation capacity has expanded
- Informal collector incomes have increased
- Steel scrap pricing has stabilised due to consistent local demand
“We work with more than 50 000 waste collectors. Their incomes have increased, not decreased,” Khan said.
Environmental research from the United Nations Industrial Development Organization further supports these findings, showing that domestic recycling reduces emissions by up to 75 percent compared with exporting waste for offshore processing.
Global Trends Suggest Legacy Mills Must Adapt
The international steel sector is shifting toward scrap-based production. Tata Steel’s transition in the United Kingdom is the latest example of established producers modernising to remain competitive.
According to Khan, decades of tariff protection for older, ore-heavy mills slowed innovation and left them less prepared for today’s resource efficient model.
“Legacy mills enjoyed decades of support. Circular mills built modern operations from scratch. The world is moving toward resource efficiency, not ore-heavy models. Adaptation is not optional,” Khan said.
A Call for Doubling Down on Policy
Khan emphasises that it is in our National Interest to maintain PPS, as Foundries, and the broader manufacturing ecosystem support building industrial capabilities that scrap dealers cannot.
“A foundry platform deepens our national skill base, strengthens manufacturing resilience, and elevates South Africa on the industrial curve. Exporting raw feedstock to the highest offshore bidder does not”
“South Africa must consume all its scrap domestically. The data supports it. The economics support it. Our industrial future depends on it,” Khan said.
The debate around South Africa’s scrap metal policy is widening beyond local disputes and drawing support from international research. Browning’s analysis, UNIDO findings and industry-level data point in one direction: countries that retain scrap for local beneficiation build stronger, cleaner and more competitive manufacturing sectors.
If policymakers retreat from this trajectory, experts warn that South Africa will lose more than revenue. It will lose industrial opportunity.
