South Africa’s estimated R8 billion per annum illicit copper economy seems set to expand even further on the back of the country’s growing shift to renewable green energy and electric cars, brushing aside a “too little too late” scrap metal export ban that has just been extended for another six months.
The SA Government instituted a December 2022 to end May 2023 ban on scrap metal exports under a trial period to help reduce the theft of copper and ferrous metals, but as results were not satisfactory, this has been extended by another six months, according to a notice in the Government Gazette published on 15 June.
The initial six month trial seems to have had little hindrance to the ever-expanding illicit copper economy damaging electrical and other infrastructure. This is being driven in part by the rocketing copper prices reflecting high international demand for the metal.
The ban on exporting copper scrap – officially a six-month experimental period – only hurt the legal copper industry without preventing illicit exports or money laundering of illegal red metal proceeds inside South Africa or abroad, said Evert Swanepoel, non-executive Chairman of the South African based Copper Development Association Africa (CDAA).
However, the trial ban did include halting the import of smelting furnaces used extensively by both legal scrap metal dealers and red metal crime syndicates to smelt copper, but did not extend to those already in South Africa before the cut-off date, said Swanepoel.
“We note over time a tenfold increase in scrap metal dealers but lately almost non-existent applications for formal and legal copper exports – but the looting of infrastructure continues with no signs of abating and that is now a clear indicator of an expanding illicit copper market,” he added.
The CDAA and Swanepoel have now called on the South African Revenue Service (SARS) to conduct a full audit on scrap metal merchants in South Africa.
Swanepoel shares the fear of civil society, intelligence experts and observers that South Africa faces a huge illicit red metal cancer bloom as it gears up for a greener yet more copper-intensive future as electric cars require three times the copper conventional vehicles do, and copper usage per megawatt for solar power systems is about four to five times more than fossil fuel whilst wind turbines use about three to four times that of fossil fuels.
Deploying the SA National Defence Force to certain Eskom facilities also cannot change the strategic and tactical advantages exploited by syndicates at present. The heart of the matter is that the South African Government simply does not seem to know what is going on – its own law enforcement and intelligence agencies are severely compromised, under-skilled or under-resourced whilst the illicit copper economy grows in leaps and bounds, said Willem Els, a senior training programme coordinator at South Africa’s Institute of Security Studies (ISS).
Els pointed to the 2021 State Security Agency Mufamadi Report and to extensive evidence emanating from the Zondo Commission on the SA Police Service indicating official incapacity and corruption at every level.
“The latest crime statistics also indicate that South Africa is moving closer and closer to failed state conditions due to government’s inability to provide a secure and safe environment for its citizens,” said Els.
South Africa’s gigantic private security industry, which has fragmented ownership but dwarfs the SA Police, also seems incapable of stopping copper and infrastructure predation and often seems integral to the entire corruption machinery at especially municipalities and state-owned entities (SOEs). Often, this sector is where huge contracts are clinched for badly-paid guards who have every interest in cooperating with copper and other syndicates.
“Most municipalities, security companies and SOEs do not seek intelligence-driven solutions as many are heavily invested into a multi-billion Rand industry whose clear incapacity suits senior managers, who often get kick-backs both from procuring new cables and appointing ineffective security service providers,” said General George Fivaz, a former National Commissioner of the SA Police Service and owner of the GFFR forensics company.
In a major indicator that South Africa is losing the illegal copper war, former Eskom CEO Andre de Ruyter recently admitted to only “foot soldier” arrests against infrastructure predation and that Police are not doing enough.
De Ruyter is credited with an ongoing shift within the Eskom environment to a more intelligence-driven security strategy over the past year, but without a single syndicate yet demonstrably smashed despite at least four reportedly identified.
According to the Department of Trade, Industry and Competition, copper theft from South Africa’s rail network and electricity grids carries an annual economic cost exceeding R45 billion.