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Statement to Parliament on the Scrap Metal Trade by Minister Anthony Hylton

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Mr. Speaker, after more than a year of closure, the scrap metal trade is now officially open. This reopening has been long in coming, but we had to ensure that due diligence was applied, so that at the end of the day we have a system guided by an appropriate regulatory framework.

This meant months of careful examination of the existing regulations, and in-depth research of best practice in other jurisdictions, and in some cases adapting them, where necessary, to create a best-fit, for the local industry.

New features have been added to create the best operating and monitoring system for the scrap metal trade. As the Minister under whose portfolio the scrap metal trade falls, I am here to report that I am satisfied that the new scrap metal regime is being operated within the best possible regulatory framework.

Contrary to the view noised in certain public spaces that the reopening of the trade is a manifestation of the ‘policy of poverty’, the trade in scrap metal benefits a wide cross section of Jamaicans, operating at various levels along the value chain. It is perfectly true that the little hand-cart man benefits, but it is also true that the dealer benefits, the large utility and industrial companies, and the shipping lines benefit.

Just this morning I received a visit from the CEO of a family-owned manufacturing company, whose business generates scrap metal in the manufacturing process. The closure of the industry had resulted in significant losses to the business, which depends on foreign exchange to purchase raw materials.

Mr. Speaker, the generation of scrap metal is a natural consequence of the modernization and retooling of industrial operations.

During the closure of the industry I received frequent calls and visits from big industrial firms and utility companies, strongly arguing the case for the reopening of the trade as they had large stockpiles of scrap metal for disposal. Their expressed preference was that the opening of the trade be limited to industrial entities only.

At the other end of the spectrum, we were bombarded with requests for the reopening of the trade, from small dealers whose livelihoods had been negatively affected by the closure.  We listened to all stakeholders and took decisions that were in the national interest, guided by a philosophy of equity and fair play, as we are of the firm view that the benefits should accrue at every level along the value chain.   

Mr. Speaker, as you may be aware, allegations have been noised in the media that the sites are being operated in the absence of the required environmental permit. This was clearly a misunderstanding, based on a lack of clarity arising from the recent changes in the operating structure.

If you recall, Mr. Speaker, Cabinet had initially approved a single central site, but based on discussions with the Scrap Metal Federation, we reviewed the initial plan and found merit in their proposal of several multi-user sites. Following a selection process and on the advice of the Department of Customs and the Police, three multi-user sites were selected.

It was agreed that these three sites would be managed by the Factories Corporation of Jamaica (FCJ). The understanding was that the owners of the sites had or would have obtained the requisite permit from NEPA. Now that there is clarity concerning the NEPA requirements, the FCJ has taken steps to immediately address the issue.

Let us make it clear, we have no intention to breach any law or policy and so we commit to adhering fully to the requirements and conditions from NEPA.

Additionally, we have made arrangements for NEPA to conduct routine inspections of the sites to ensure that there is no contravention of environmental laws. In addition to the foreign exchange earnings and the job creation, the scrap metal trade also clears the environment of derelict scrap metal.

Mr. Speaker, in preparation for the reopening of the industry, great care was taken to ensure that the infrastructure and systems are the most effective for the industry at this time.

The owners and operators of the three multi-user sites have themselves gone to great lengths to equip the sites to ensure the smooth running of that aspect of the trade. The state of the art equipment installed at some sites is first world – a clear indication of cutting edge technology at work.

On one site there is a piece of equipment, a ‘quick loader’, valued at some $45 million dollars, which has the capacity to fully load a 40 foot container in under 10 minutes. In visiting the sites, there is an obvious sense of pride exhibited by the owners … pride about being part of a well-run, well-organized industry which will have multiple benefits at many different levels.

All of the sites have 24 hour video surveillance, which is monitored off site, in addition to day time security provided by the security forces. Mr. Speaker, the traders, dealers and exporters are in the process of getting themselves fully legitimized, acquiring the various permits, licenses and police recommendations in order to carry out the various activities associated with the trade.

What we have in place therefore is a trade which is poised to earn significant foreign exchange and provide well needed jobs.

The scrap metal trade is part of the global value chain and at its zenith in 2006 earned the country US$100 million in foreign exchange and provided jobs for over 10,000 jobs persons many  from the lower socio-economic group. With the price of energy ever increasing, and the levels of certain non-renewable resources decreasing, it is my expectation that the demand for scrap metal will continue to increase.

This however, must not be pursued at the risk to public infrastructure and personal property. In the past we lost millions of dollars to theft and vandalism, in addition to the cost of dislocation to businesses and additional security measures which companies were forced to implement.

Underpinning the reopening of the trade, therefore, has been the need to tighten and enforce the regulations and ensure that we bring to book any and everyone who does not play by the rules. All of us have to play by the rules if we are to have a sustainable and proper functioning scrap metal industry.

Mr. Speaker, under the new regime there are no items which are regarded as prohibited. Certain items which were hitherto listed as prohibited are now listed as restricted. These include, but are not limited to, manhole covers, copper, I-beams and bridges. Companies which generate these restricted items can exercise the option of exporting these items themselves, or selling them through a dealer.

The new regime features a strengthened regulatory framework, which allows for traceability along the value chain and verification of ownership.

Not to reopen the industry would send a very negative message to the international community about our ability as an administration and as a country to regulate an industry which is a major foreign exchange earner.

There is enough data to show that where a trade or an activity is banned in the face of high demand, it serves only to spawn illicit activity, undermining the very objective it had set out to achieve.

It should also be noted that former Minister of Industry, Christopher Tufton, now head of CAPRI, is on record saying that he now believes that the trade should be allowed to continue and the necessary controls should be strictly enforced. Which of the cacophony of voices coming from the Opposition should we therefore be listening to?

Mr. Speaker, in the third week of January Factories Corporation of Jamaica (FCJ), took possession of the sites and began, along with the Department of Customs and the Police to assess and test existing stockpiles of scrap metal to verify their export readiness. The FCJ, the Police and Customs also used the time to refine and retest the systems, the infrastructure and the technological support.

Mr. Speaker, a new feature of the scrap metal regime is the collaboration with the Ministry of National Security to rid police stations across the island of derelict vehicles no longer needed for evidence. This will earn significant foreign exchange for the Ministry of National Security. Their removal will reduce the unsightly congestion in the parking lot of several police stations and reduce the health hazard posed from vermin which use these scrap heaps as a breeding ground.

Mr. Speaker, the new regime makes a distinction between industrial and non-industrial scrap and rigorous operating procedures have been designed to govern this. I will now highlight a few elements of the regulatory regime:

  • All exporters, (excepting exporters who generate metal waste in their manufacturing operations) must post a seven million dollar bond with the Factories Corporation of Jamaica. The intent is to apply a portion of the bond towards compensation for victims of theft. Entities which generate waste for re-use in their production processes will be exempt.
  • A convicted exporter will pay a fine of up to $2 million and lose his or her licence to operate
  • All general scrap metal exporters will now have to export from one of only three central multi-user sites
  • All exporters, dealers, carriers (including the handcart man) must be in possession of a licence or permit from the Trade Board
  • All exporters are required to submit a police recommendation from a superintendent or an officer of greater rank. The Minister may also request a police report.
  • Non nationals must be in possession of a work permit
  • There is a restriction on the export of irrigation pipes used in agriculture, as well as railway lines, copper, I-beams, bridges, manhole covers and sign posts. Special permits must be obtained from the Minister in order to export these.
  • Companies selling scrap metal to licensed dealers must put a distinguishing mark on the items
  • Special permission must be sought to modify or alter scrap metal intended for export
  • Customs and the police will be posted permanently at the sites and there will be 100% inspection of ALL containers. Additionally, the police and customs are duly authorized to carry out random checks at both exporter and dealer storage sites
  • Material will be on display at sites for five days to facilitate public viewing before loading can commence
  • Anything remotely suspect will be detained for investigation by the police and customs
  • A website has been established by FCJ for the public to view and lodge complaints of theft. The address is: www.scrapalertjamaica.com

Mr. Speaker … this is a new era for the scrap metal trade in Jamaica and I am confident that we have an effective response strategy in place to curb the theft of scrap metal, as well as regulations for the efficient  operation of the trade.

Factories Corporation of Jamaica, the Department of Customs, and the police have the necessary resources, the infrastructure and the systems in place to make the regime successful.

Each of us has a part to play. Jamaica needs the foreign exchange and the jobs, while cleaning the environment of scrap and derelict material. . More importantly, let us see this as yet another opportunity for Jamaica to find its niche in the global value chain.  

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