Recyclers call for probe into scrap cartel as IDC downplays R8.5bn AMSA bid

South Africa’s steel sector is under renewed pressure as metal recyclers demand urgent reforms to scrap metal regulations, while the prospect of a R8.5 billion Industrial Development Corporation (IDC) acquisition of ArcelorMittal South Africa’s long-steel division remains uncertain following due diligence.

Three major industry bodies — the Recycling Association of South Africa (RASA), the Metal Recyclers Association (MRA), and the Scrap Recycling Coalition (SRC) — have called for a full public inquiry into what they describe as systemic market distortions.

Their appeal follows a landmark ruling by the Competition Tribunal on 6 October 2025, which confirmed the existence of a buyers’ cartel that manipulated scrap metal prices between 1998 and 2008.

The companies implicated included Cape Gate, Scaw SA, ArcelorMittal South Africa (AMSA), and Columbus Stainless.

Although several firms received leniency or settled with the Competition Commission, Cape Gate’s denial of wrongdoing was rejected. The tribunal found it actively participated in suppressing prices, damaging fair market competition and undermining recyclers for over a decade.

In a joint statement, RASA CEO Nancy Strachan, MRA chairperson Quintin Starkey, and SRC chairperson Mark Fine said, “We are not just asking for a review; we demand a thorough, transparent inquiry involving all stakeholders to investigate the origins of these policies, their implementation flaws, and any undue influence from cartel participants.”

Moreover, the focus has now shifted to two contentious state interventions — the Price Preference System (PPS) and scrap metal export tax — which recyclers argue continue to favour dominant buyers.

These mechanisms, originally introduced to secure affordable local scrap for steel producers, have instead created an uneven playing field, leaving independent recyclers to compete for poor-quality feedstock at below-market prices.

To intensify pressure, the associations have appealed directly to the Presidency, the Department of Trade, Industry and Competition (DTIC), the Competition Commission, and the International Trade Administration Commission (ITAC), calling for a public inquiry with enforceable outcomes. They’ve also established an anonymous whistleblower email channel ([email protected]) to expose ongoing abuses.

AMSA itself has also criticised the PPS and export tax, arguing that they have rendered its Newcastle operations uncompetitive, particularly against international rivals using electric arc furnaces instead of traditional blast furnaces.

Amid these tensions around ArcelorMittal, hopes had rested on a potential R8.5 billion acquisition of AMSA’s long-steel division by the IDC. As reported by Newcastillian News on 30 September 2025, multiple sources indicated that the IDC was actively working with financial advisers to evaluate a bid that could stabilise the industry, absorb AMSA’s debts, and attract foreign operators.

However, that optimism may now be fading.

IDC spokesperson Tshepo Ramodibe has clarified that “the Corporation remains committed to working with government and industry stakeholders to safeguard SA’s steel sector — particularly long steel products.” But he added that the R8.5 billion figure and any definitive deal “remain speculative” following the conclusion of due diligence at the end of September.

While the door is not yet closed, the future of both South Africa’s scrap metal regulations and AMSA’s Newcastle operations now hangs in the balance. What happens next could determine whether the country retains its strategic long-steel manufacturing capacity — or surrenders more ground to international markets.

As policymakers, recyclers, and industry players circle the issue, the coming months will test the government’s willingness to act on systemic policy failures, and whether market fairness and industrial capacity can finally be brought into alignment.

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