In a decisive move to dismantle criminal networks and restore integrity to a vital sector, the South African government has implemented a nationwide ban on cash transactions for scrap steel. This landmark policy, announced by the International Trade Administration Commission (ITAC), marks one of the most significant concrete reforms since the country’s recent removal from the global Financial Action Task Force’s (FATF) “grey list.”
The ban, effective immediately, mandates that all payments for scrap metal must be processed through formal banking channels, creating a mandatory audit trail. This measure is designed to sever a primary funding source for illicit activities, as the largely cash-based scrap metal trade has long been identified as a conduit for money laundering and trade in stolen metal infrastructure.
A Multi-Pronged Strategy for a Troubled Industry
The cash ban is the centrepiece of a broader package of reforms following a year-long review of the scrap pricing system. Alongside the payment overhaul, ITAC has also reduced the price rebate offered to local buyers of scrap metal from 30% to 25%. This adjustment aims to make more scrap metal available at a competitive price for the domestic primary steel industry, which has been struggling with high costs and crippling infrastructure theft.
“For too long, the scrap metal trade has been characterised by illegality and unfair practices that have harmed our formal economy and jeopardised public infrastructure,” stated a senior ITAC official. “These interventions are a holistic effort to bring transparency, support our struggling mills like ArcelorMittal South Africa (AMSA), and protect critical economic assets like copper cables and steel rails from being stolen and sold for cash.”
Industry Reaction: Support Meets Significant Concern
The government’s position has been met with strong support from the primary steel producers and manufacturing bodies. They argue that the reforms will help level the playing field, ensure a more reliable and affordable supply of raw material, and ultimately contribute to stabilising an industry that has shed thousands of jobs.
“This is a courageous and necessary step,” said a spokesperson for the Steel and Engineering Industries Federation of Southern Africa (SEIFSA). “It directly targets the economic incentive behind the rampant theft that paralyzes our railways and power infrastructure.”
However, the new regulations have sparked deep concern within the recycling industry. The Southern Africa Institute of Waste Management (SAIWM) and other associations representing smaller scrap dealers argue that the cash ban, while well-intentioned, will have severe unintended consequences.
The government has acknowledged these concerns but maintains that the long-term benefits of a formalised, transparent, and legal industry outweigh the short-term disruption. The success of this bold policy will now hinge on its enforcement and whether the promised stability for the formal steel sector can indeed be achieved.
“Many small-scale collectors and informal traders operate solely in the cash economy and lack access to banking facilities,” explained a recycling association representative. “This policy will effectively criminalise their livelihood and could collapse the bottom end of the value chain, leading to job losses and reducing the overall recycling rate as material is diverted to landfill or stockpiled illegally.”
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