Cash Ban Bill Targets R45bn Scrap Metal Losses

Police moved on Friday to amend the Second-Hand Goods Act, aiming to choke off the illicit scrap metal trade and infrastructure vandalism that drain an estimated R45bn from South Africa’s economy each year. The effort has moved from policy paper into legislative machinery.

The amendments, if passed in their current form, would force the scrap metals industry onto cashless electronic transactions, cutting off the financial incentive behind years of cable theft and vandalism of rail, power and public infrastructure. Dealers would be compelled to retain sellers’ personal information and keep a register in the prescribed form recording particulars of every acquisition, disposal or pawning of second-hand goods. Auctioneers would face tightened rules. The changes would also extend to precious metals, including gold and chrome, the two metals at the heart of the country’s illegal mining industry.

The operational detail is spelled out in the bill itself. “A recycler who acquires controlled metal from a scrap metal waste picker must keep a scrap metal waste picker’s register in the prescribed format in which the scrap metal waste picker’s full names and identification document number must be recorded,” the bill reads. It further requires that “a recycler must, when concluding any transaction with a person to acquire controlled metal, pay such a person by way of an electronic payment.”

The scale of the enforcement problem is visible in the records of the operators bearing the brunt. Transnet, which runs the country’s rail network, saw cable stolen from its lines rise from 120km to 724km annually between 2017 and 2021, while incidents climbed from fewer than 2,000 to nearly 4,500. Eskom, the power utility, is estimated to lose R5bn to R7bn a year to copper cable theft alone, with a further R2bn spent replacing stolen cable.

The proposed changes also reach into licensing and compliance. Foreign nationals without verified, legal permanent residency status would be automatically disqualified from obtaining a trading licence in the second-hand goods market. Jewellers would be barred from buying unwrought metal directly from unlicensed producers, and would carry the onus of verifying that any seller of unwrought or semifabricated precious metal is duly authorised under the Precious Metals Act or other law. Where a jeweller suspects on reasonable grounds that metal offered to them has been tampered with to conceal its identity, a report must be made.

Meanwhile, the timeline is tight. The cabinet approved the bill for public comment in August, with November 2 set as the deadline for submissions. The push follows a policy brief published last month by the South African Human Rights Commission, which framed the theft and trafficking of copper cables and scrap metal from public infrastructure as a human rights crisis rather than merely an economic or security matter. “Parliament and the relevant portfolio committees should formally acknowledge infrastructure vandalism as a human rights crisis,” the commission said, putting the annual cost at R45bn.

The commission argued that enforcement cannot stop with the people physically removing infrastructure, since the illicit metals economy depends on organised networks, receiving dealers, facilitators and illicit financial flows. “Cash transactions reduce traceability and can facilitate the movement of stolen metal through apparently legitimate transactions,” it said, recommending that the Financial Intelligence Centre be directed to monitor suspicious patterns in scrap metal transactions and report to SAPS and the International Trade Administration Commission of South Africa (Itac).

That recommendation aligns with steps already taken by Itac, which last year, in a review of the 2013 price preference system, recommended barring cash from all transactions involving controlled scrap steel destined for export, closing gaps in illicit financial tracking. The move fits South Africa’s broader tightening of anti-money-laundering controls after its time on the Financial Action Task Force greylist.

The amendments would also reinforce the department of justice & constitutional development’s recent move to explicitly describe illegal mining as a crime in South African statutes. Controlled metals under the act span copper, aluminium, zinc, chrome, lead, white metal, nickel, tungsten, tin, ferrovanadium, ferrosilicon, ferrochrome, brass, bronze, cobalt, gold, silver and any platinum group metal, whether wrought or unwrought.

Whether the November 2 submissions shift the bill’s terms, and whether a cashless register can actually stem a R45bn illicit trade, will be the test of this legislation once it reaches Parliament.