THERE are large volumes of scrap metal materials being exported from Zambia to neighboring countries yet the country too has industries that should be using these materials.
The country loses out by exporting scrap rather than processing these and adding value internally.
Zambia’s steel manufacturing industries are currently booming with signs of providing the much needed revenue to Government.
Positive economy results can therefore be attained in the industry if the sub sector is well managed.
It has, however, been observed that in the last few years, Zambian steel manufactures have been opting to export scrap metal before satisfying the local market.
Over 30 countries impose some sort of restriction on scrap metal. Export restrictions on mineral ores, concentrates, and metal scrap exist in around 30 countries.
These confer support for domestic downstream processing firms in both the primary and secondary sectors if increased supply places downward pressure on feedstock prices.
It is for this reason that the Jesuit Centre for Theological Reflection (JCTR) has called on Government to increase export tax on scrap metals to 35 percent as way to protect Zambia’s steel manufacturing industries.
According to JCTR, the current export tax of 25 percent has not curtailed scrap metals export to protect Zambia’s steel manufacturing industries and yields a minimal tax from this booming business.
By increasing export tax to 35 percent, JCTR explained, exports of metal scrap would be reduced and or revenues would increase from metal scrap exports
Zambia exports of copper waste and scrap to South Africa was US$822 during 2019, according to the United Nations database on international trade.
In 2017, Universal Mining and Chemical Industries Limited (UMCIL) planned to import scrap metal from neighbouring countries for its Kafue Steel Plant following low supply of the commodity from the local market.
Company technical director Julius Kaoma said as the company expanded production, it needed more scrap metal despite it mining iron ore from their mine to produce a wide range of steel products.
“We will continue to buy scrap metal but unfortunately, the scrap availability is low, our plant consumes most of the scrap found in the country and now, we are trying to buy some scrap from neighbouring countries,” Dr Kaoma said.
The scrap metal industry in turn is of critical importance as a supplier of raw material into primary and secondary metal production.
Scrap metal is also important as a feedstock in the production of downstream metals due to the relatively lower energy consumption and its lower carbon footprint versus other metal production processes.
It is widely seen as a strategic resource and many countries have scrap metal policies and regulations in place to support the development of their domestic metal producing industries.
Tax related support measures that increase firm income or reduce the cost of capital, energy, or mineral resources are very common in the primary sector.
Mining and mineral processing firms benefit from targeted reductions in the corporate income tax rate and tax holidays in several important mining jurisdictions.
