Saving trade

For years countries have worked to impose export restrictions, duties and taxes designed to keep scrap metals at home, presumably so their domestic mills, smelters and foundries would have access to raw materials at more affordable prices.

But, in light of current economic conditions, it seems allegations of protectionism designed to benefit domestic consumers of scrap material have been more frequent, much to the dismay of the scrap metal recycling industry.

In today’s market, steel mills are running at reduced capacity utilization rates, while recyclers complain about reduced scrap generation and competing for available tonnage to keep their yards busy. A related development is the increase in government policies, restrictions or threatened measures intended to keep scrap materials within their borders.

Unfortunately, this sort of protectionism is hurtful to the scrap recycling industry, recyclers say, because the sector depends upon free and fair trade on an international scale.

Therefore, scrap metal recyclers naturally are concerned as various countries across the globe discuss or implement measures designed to restrict the export trade of scrap metals by way of various taxes, duties or other restrictions.
 

Increasing protectionism

One of the more recent restrictions on scrap metal trade, for example, was imposed by South Africa in the latter part of 2013, when that country’s minister of economic development began regulating the export of scrap metals. That meant banning the export of a long list of ferrous and nonferrous metals unless these materials first were offered for sale to domestic consumers at a 20 percent discount.

For the time being, scrap recyclers in South Africa can only export their materials after applying for an authorization to do so, and the authorization is conditional upon the approval of the country’s consuming mills.

However, Christian Rubach, president of the Ferrous Division of the Bureau of International Recycling (BIR), Brussels, and an executive with Germany’s TSR Recycling, says South Africa’s policy protects the country’s steel mills by giving them a 20 percent price advantage for scrap.

“The idea behind it is to have better prices compared to global prices,” he says of the country’s policy.

South Africa isn’t the only country with these sorts of policies. Other countries that for years have imposed export duties or taxes on various scrap metals include Russia, the Ukraine, India and Belarus.

“It’s just not a level playing field,” according to Robert Voss, president of the European Metal Trade and Recycling Federation (EUROMETREC) and CEO of the U.K.-based Voss International. “We are controlled by more and more red tape legislation and more and more documentation, much of which doesn’t pertain to the secondary metals business.”

Voss says recyclers throughout Europe are working hard to get these sorts of restrictions or quasi-restrictions lifted. “We believe that the only way for our industry to succeed is with free and fair international trade,” he says.

It’s a stance also heavily promoted by the BIR. Björn Grufman, president of the BIR and CEO of the Swedish recycling company Metallvarden AB, says politicians throughout the European Union are listening to an increasing number of arguments from scrap consumers who say they are having trouble accessing raw materials generated and recovered within the EU.

“There has been an increased interest in something they call resource efficiency and also access to raw materials,” says Grufman. He says more consuming companies are complaining about their need to import expensive raw materials from outside the EU because domestic suppliers are exporting these goods.

“Suddenly, somebody starts to investigate the possibility of making some kinds of regulations against export,” Grufman says, adding that it is a disturbing situation.

“We have to inform the politicians, and we have to tell them what the effect would be if they start to do that,” Grufman adds.

Voss articulates a presumed reason for the restrictions. “They don’t want to pay the right price, and they don’t want to pay the right terms,” he says of consumers who lobby for such policies. “And what’s the easiest way to do that? It is to go to the government and complain that all of your raw material is leaving the country and ask for some sort of control.”
 

European measures

The European Commission has established a European Innovation Partnership on raw materials to study ways to reduce the EU’s dependence on imported raw materials.

At issue, Rubach says, is the EU proposal that would enforce mandatory certification of waste treatment facilities outside the EU. It concerns Rubach and others because waste treatment facilities would include steel mills, copper smelters and the like that consume scrap metals as feedstock.

Tom Bird, president of the European Ferrous Recovery & Recycling Federation (EFR) and managing director of Van Dalen Recycling in the U.K., refers to a document called the Steel Action Plan, which has been put forward as part of the European Innovation Partnership on raw materials, which is looking at ways to secure raw materials for industries within the EU.

As part of that initiative, the commission is collecting perspectives and information on possible EU measures to ensure that its “waste,” which includes scrap metals, continues to be treated in an environmentally respectful way. As scrap metals are currently considered waste in the EU, this recent initiative has struck a note of concern among recyclers.

Bird says that while it’s important for the EU to have a strong and robust steelmaking sector, monitoring its raw material supplies could be quite a dangerous matter.

“The EU partnership planners have been securing and monitoring flows of raw material, but the next step should not be trade restrictions.”

Furthermore, Bird says, stopping material from moving out to markets where it would naturally move to based on demand and price is very dangerous.

Rubach says discussions occurring in the EU Commission on Industry involve steel mills, steel mill federations and the major European producers of nonferrous metals, who are working to make the case that the export of scrap metals poses an environmental issue.

It is an argument that Rubach characterizes a “trick” that would prevent the export of scrap metals under the guise of environmental conditions or motivations. He says the proposals also call for tighter restrictions on steel, aluminum and copper scrap on the basis of strict CO₂ (carbon dioxide) emission regulations in Europe, which may not exist in other regions.

Similarly, other European recycling industry leaders seem to find this statement misleading and insulting.

“To use the argument that sending scrap to parts of the world where they make steel that’s perhaps not up to European standards or implications in terms of emissions, etc., does a disservice to the extremely advanced and efficient techniques that are operated outside of the EU,” Bird says.

Rubach says, while all of this remains under discussion, its intent is to support the EU steel and nonferrous metal producing industries by keeping scrap metals at home, not promote environmental causes. “The reason behind it is always money and profit, nothing else,” he adds.

He says many European steel mills are in favor of the proposal because it could lead to as much as a 40 percent price reduction in scrap. It’s a price break the European mills need, he adds. “They have a disadvantage in prices compared to non-EU steel mills because the energy [prices] in Europe are so high.”

However, not all steel mills are in support of the proposal, Rubach adds. Some rightfully worry about their trusted suppliers going out of business.

Many European countries, particularly those in coastal areas, Rubach says, depend on steel scrap exports as they have invested heavily in deep sea cargo shipping. Among them are Great Britain, Belgium, the Netherlands, northern Germany, Denmark, Sweden, Finland, Poland, other Baltic Sea countries and the north of France.

Steel mills that depend on imports from these countries say that imposing such restrictions would ultimately hurt their supply by putting EU recyclers out of business.

“If now exports out of the EU would be forbidden because of environmental arguments, then these steel scrap industries would break down,” Rubach explains.

Similarly, Grufman says, copper smelters within Europe hold opposing views on the topic.

“They are very similar and very much in competition with each other and have very different views on how the material flow should actually go,” he says of the copper smelting companies in the EU.
 

Free and fair trade

Bird, along with other recycling industry leaders, is arguing strongly for a steel scrap recycling market that’s dictated by world markets, not by artificial controls. “There has to be a free flow and free trade within the steel scrap recycling sector,” he says. “To restrict trade would be catastrophic for the steel recycling sector and would not be the answer.”

Bird says the recycling industry must make its opposition to this EU proposal very clear while at the same time reiterating its strong support for a robust European steelmaking sector.

For his part, Voss says members of EUROMETREC don’t accept any form of protectionism and what’s more it’s not necessary.

“We believe that the domestic consumers have an inherent and in-built advantage in any case, and, providing that they pay the right price,” he says, “there should be no reason why they can’t get sufficient materials.”

While these industry representatives hold a similar stance to the topic of trade restrictions, they don’t appear to agree on what may happen in Europe.

Rubach says, while he doesn’t know what will become of the EU proposal, “my best guess is something will happen in that direction because the EU commission very clearly stated … that they are going to establish a scrap monitoring system.”

However, Grufman says he isn’t excessively concerned about trade barriers being considered within the EU. “It’s a lot of smoke but no fire going on,” he says. “There’re a lot of industry representatives asking for restrictions or regulations, but I don’t think it will come true.”

Voss says that in his 30 years of involvement with EUROMETREC and his 27 years on the BIR’s Nonferrous Committee board, he’s been fighting these types of controls nonstop “since day one.”

He adds, “The fight goes on and on.”

Voss says recyclers can make their voices heard in this campaign by making organizations such as the BIR, EUROMETREC or EFR aware when new restrictions are introduced. “Then we’ve got to work out why they’re happening, how they’re happening and who they’re going to affect,” he says.

Finally, organizations representing the scrap metals recycling industry can put forward countersuggestions, recommendations and proposals. “If necessary we’ll approach the EU representatives in various countries,” Voss says.

The author is a managing editor with the Recycling Today Media Group and can be contacted at lmckenna@gie.net.