Scrapping for scrap.

Author:Dhliowayo, Dominic
Position:Effects of South Africa's increased demand for scrap metal on neighboring countries

An unprecedented demand for scrap metal from South Africa has led to a major industrial crisis in neighbouring countries. Foundries in Zimbabwe, Botswana and even Kenya are struggling to survive as huge quantities of scrap make their way south or overseas.

Foundry, steel-making and scrap smelting businesses, in the belt of countries bordering South Africa, are facing a supply crisis which is destroying their viability and which has already seen the closure of several companies. The crisis has been brought about by an exponential increase in scrap metal exports to the high demand South African market. A growing re-export trade to the Far East from South African ports has made the situation even worse.

Traditionally these industries have been protected, in countries such as Zimbabwe, by legislation which forced scrap suppliers to service local demands ahead of export opportunities.

However, the gradual implementation of market reforms has made itself felt in the last three to four months and the suppliers are now able to sell to the highest bidder, who, in most cases, are South Africans capable of paying higher prices due to the comparative weakness of the currencies in neighbouring countries.

Suppliers are then able to lift their profits even further by playing off desperate local consumers against each other for the remaining metal.

This situation has seen a recent boom in south-bound scrap exports from Zimbabwe. The bulk of the country's cast iron and copper scrap is exposed and white steel scrap is still available - rail shipments by the 44 tonne wagon-load are becoming increasingly frequent.

Some 8,000 tonnes of used beverage cans also cross Zimbabwe's southern border every month as baled steel and aluminium, with the collection and processing being carried out by a single local recovery firm.

The shortage, combined with a lack of trained personnel and spare parts, as well as frequent impurities in locally sourced supplies of pig iron and coking coal, has driven a number of Zimbabwe's approximately 40 foundries out of business. While the bulk of Zimbabwe's foundries are located in Harare, the bigger operations are in Bulawayo, the country's southerly second city. There are two which process 1,200 to 2,000 tonnes of scrap per month and about eight processing 500 to 750 tonnes per month in the...

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