Scrap metal export ban offers EAC firms lifeline

The East African Community has banned the export of scrap metal, offering a lifeline to the region’s metal-related industries which are facing closure due to shortage of raw materials.

In a gazette notice released this week, the EAC Council of Ministers has stopped the export of used automobile batteries, lead scrap, crude and refined lead, and all other forms of scrap metals.

The development, analysts said, was meant to seal loopholes that have seen traders export scrap metal to countries like China, draining the five EAC economies of much needed raw materials in metal-related industries.

The move is likely to jolt Kenya’s mult-billion shilling scrap metal industry as the country has for years left its doors open to exporters.

The ban will be a reprieve to firms like Associated Battery Manufacturers (ABM), EAC’s leading cell maker, which had threatened to close down before the end of the year due to shortage of raw materials.

The emergence of electric car markets in Western economies and high demand for car batteries in China has fuelled a global demand for lead-acid batteries, with entrepreneurs turning to Africa where recyclable lead is categorised as scrap metal.

Expensive steel

“It makes no sense for the region to be exporting cheap scrap metal and importing expensive steel and other metals for local use,” said Mr Nalo.

Kenya introduced a 20 per cent export duty on lead and scrap lead in 2007, which was removed in 2008 when Finance minister Uhuru Kenyatta exempted scrap lead dealers at the Export Processing Zones (EPZs) from the duty.

Mr Kenyatta’s predecessor, Amos Kimunya, had imposed the tax in 2007 to cushion the sector against Chinese demand for lead used to manufacture batteries for its emerging motor industry.

Mr Kimunya defied pressure from Kenya Iron and Scrap Metal Association (Kisma) and proposed the duty, saying the move was necessary to protect local battery recycling plants from losing a major source of raw materials.

Mr Kenyatta’s removal of the duty allowed unscrupulous smelters to invade EPZs from where they ship lead and other scrap metal out of the country, in what has become Kenya’s largest source of income from China.

“The intention of putting a blanket ban on all scrap metal exports is to protect local industries in all the five countries and curb vandalism, ” said Trade minister Amos Kimunya.

“The rules have been gazetted for avoidance of doubts as unscrupulous smelters defied previous bans,” Mr Kimunya told Business Daily.