How to Start Scrap Metal Collection and Recycling Business: The Other Gold Mine

How to Start Scrap Metal Collection and Recycling Business: The Other Gold Mine

Scrap metal recycling is a business that involves the collection, processing, and sale of scrap metal.

Scrap metal also known as condemned iron by Nigerians, refers to metal that is no longer in use and is considered waste, but it can be recycled and reused.

You can make money by selling these scrap metals directly to metal recycling companies/collectors or refining them to be sold as recycled metals.

This business plays a crucial role in environmental sustainability by reducing the need for mining and refining new metals.

In this article, we shall be expounding on how you can start a scrap metal collection and recycling business.

How to Start Scrap Metal Collection and Recycling Business in Nigeria and Africa

1. Understand the Trade:

The scrap metal collection and recycling industry prove to be a lucrative business in Nigeria, boasting a market value of $217.00 billion in 2020. Projections indicate significant growth, with an estimated value of $368.71 billion by 2030. This expansion is expected to occur at a Compound Annual Growth Rate (CAGR) of 5.2% from 2021 to 2030, as reported by Yahoo Finance.

Nigeria, ranking as the second-highest country in Africa after South Africa for market value in the recycling business, significantly contributes to the global market value, as highlighted by IndustryArc.

Entering this business requires acquainting yourself with the various types of scrap metals available for trading in Nigeria, understanding their respective market prices, and identifying the companies engaged in purchasing either the scrap metals directly if you’re not recycling them or the recycled metals.

Types of Scrap Metals and their average prices:

  1. Steel: Steel is one of the most commonly recycled metals worldwide. In Nigeria, scrap steel is often sourced from construction sites, manufacturing plants, and end-of-life vehicles. Price per kg: N100 per kilo
  2. Aluminum: Aluminum is lightweight and corrosion-resistant, making it a valuable material for recycling. Scrap aluminum can be obtained from beverage cans, window frames, doors, and various industrial processes. Price per kg: N800 per kilo
  3. Copper: Copper is a highly sought-after metal due to its excellent conductivity and corrosion resistance. Common sources of scrap copper in Nigeria include electrical wires, plumbing pipes, and electronic components. Price per kg: N2,800 per kilo
  4. Brass: Brass is an alloy of copper and zinc, and it is often used in plumbing fixtures, musical instruments, and decorative items. Scrap brass can be found in old plumbing fittings, valves, and electrical components. Price per kg: N800 per kilo
  5. Lead: Lead is a heavy metal that is used in batteries, roofing materials, and various industrial applications. Scrap lead is commonly sourced from used batteries and construction materials. Price per kg: N1,000 per kilo
  6. Stainless Steel: Stainless steel is corrosion-resistant and has various applications, including in kitchen appliances, cutlery, and industrial equipment. Scrap stainless steel is often obtained from discarded appliances and manufacturing processes. Price per kg: N800 per kilo
  7. Zinc: Zinc is commonly used as a coating for steel to prevent corrosion. Scrap zinc can be found in various forms, including roofing materials, gutters, and coatings on steel products. Price per kg: N800 per kilo
  8. Bronze: Bronze is an alloy of copper and tin, and it is often used in sculptures, bearings, and architectural applications. Scrap bronze can be sourced from old statues, bearings, and other bronze components. Price per kg: N3,000 per kilo
  9. Nickel: Nickel is used in various alloys, particularly in the production of stainless steel. Scrap nickel can be obtained from the recycling of stainless steel and nickel-containing industrial components. Price per kg: N800 per kilo
  10. Electronic Scrap (E-Waste): With the increasing use of electronic devices, electronic scrap has become a significant component of the recycling industry. This includes discarded computers, mobile phones, and other electronic gadgets that contain valuable metals like gold, silver, and palladium. Price per kg: N2,000 per kilo
  11. Automotive Scrap: End-of-life vehicles contribute to the availability of automotive scrap, including ferrous and non-ferrous metals. This includes steel from the car body, aluminum from parts like wheels and engines, and copper from wiring. Price: N100,000 and above

Better placed in a tabular format:

Types of Scrap MetalsPrice per kg (Naira)Price per pound (Naira)Price per ton (Naira)
SteelN100N220N100,000
AluminumN800N1,763N800,000
CopperN2,800N6,172N2,800,000
BrassN800N1,763N800,000
LeadN1,000N2,204N1,000,000
Stainless SteelN800N1,763N800,000
ZincN800N1,763N800,000
BronzeN3,000N6,613N3,000,000
NickelN800N1,763N800,000
Electronic Scrap (E-Waste)N2,000N4,409N2,000,000
Automotive ScrapN/AN/AN100,000 and above

Note: These are market average prices in the scrap metal business in Nigeria and they can vary based on market conditions, location, and other factors. Additionally, the price for Automotive Scrap is given as a starting point and may vary depending on the specific materials and components in the scrap.

Companies that buy Metal Scrap in Nigeria:

  • Metal Recycling Ind. Ltd
  • Kaddosh Metal Scrap Nigeria
  • Nimet Com Limited
  • Green Recycling Industries
  • Shongai Packaging Industry Ltd
  • Metal Recycling Industries Ltd (M.R.I) 
  • Chanja Datti Co. Ltd 
  • Recyclepoints
  • Verde Impacto 
  • Wecyclers
  • Envirocycles Ltd
  • Julius Recycling Company
  • Takman Recycling Services

The type of businesses that make use of recycled metals:

  • Construction Industry
  • Automotive Industry
  • Manufacturing Sector
  • Electronics Industry
  • Packaging and Containers
  • Energy and Renewable Industries
  • Jewelry and Artisan Crafts
  • Home Furnishing and Decor
  • Shipbuilding and Maritime Industry
  • Aerospace Industry
  • Renovation and Demolition Service

The adoption of recycled metals by these industries is driven by a combination of environmental awareness, cost savings, and the desire to reduce dependence on primary metal production. Using recycled metals supports sustainable practices and helps to conserve natural resources.

2. Open a Scrap Yard:

Owning a recycling company may entail higher costs, despite having the potential for more profits.

However, acting as an intermediary is considerably better and more profitable than taking on the role of a collector.

For the intermediaries in the metal scrap business, one of the fundamental aspects of starting a scrap metal recycling business is establishing a scrap yard.

Choose a suitable location with ample space for collecting, sorting, and storing different types of scrap metals.

Ensure that the yard is easily accessible for suppliers and equipped with the necessary infrastructure, such as weighing scales, sorting equipment, and storage containers.

Implement efficient organization and safety measures to create a productive and secure working environment.

3. Obtain the Necessary Licenses:

To operate a scrap metal recycling business legally in Nigeria, you must obtain the required licenses and permits.

Consult with local authorities and regulatory bodies to understand the specific licensing requirements for your region (State/City) as these can vary due to how unappealing this business looks to the public environmentally.

Typically, you will need basic licenses that relate to environmental compliance, waste management, and business operations (Business Registration and Compliance with tax).

Complying with regulations not only ensures the legality of your business but also contributes to environmental sustainability, a key aspect of the scrap metal recycling industry.

4. Build Relationships and Networks:

Establish strong relationships with suppliers (collectors) and potential buyers. Network with industries, construction companies, and individuals who generate/collect scrap metal.

Reliable sources of scrap metal are essential for the success of your business.

Similarly, building a network with manufacturers and other businesses that use recycled metal ensures a market for your products.

Trust and reliability in your relationships will be vital for the sustained growth of your scrap metal recycling venture.

5. Invest in Equipment and Technology:

Invest in the right equipment for collecting, sorting, and processing scrap metal efficiently if you are going to be involved in the recycling process.

This equipment and technology used in the scrap business include:

  1. Crane and Heavy Machinery: Cranes and heavy machinery are essential for lifting and transporting large pieces of metal, especially in scrap yards or at demolition sites.
  2. Magnets and Magnetic Separators: Magnets are used to separate ferrous metals (those containing iron) from non-ferrous metals. Magnetic separators efficiently extract ferrous metals, such as steel, from the scrap stream.
  3. Shredders and Shears: Shredders and shears are used to break down large pieces of metal into smaller, more manageable sizes. Shredders, in particular, are effective in reducing the size of scrap metal for further processing.
  4. Balers and Compactors: Balers and compactors are used to compress and compact scrap metal into manageable and transportable forms. This equipment is particularly useful for preparing materials like aluminum and copper for shipping.
  5. Sorting Systems: Automated sorting systems use various technologies, including conveyor belts, sensors, and air classifiers, to separate different types of metals based on their properties.
  6. Radiographic and X-ray Equipment: In some cases, radiographic and X-ray equipment is used to analyze the internal composition of metal scrap, helping to identify and sort different materials more accurately.
  7. Flame Cutting Equipment: Flame cutting equipment, including oxy-fuel torches and plasma cutters, is used to cut through thick metal pieces. This is especially important in the demolition of structures and the processing of large metal components.
  8. Scale and Weighing Systems: Accurate weighing of scrap metal is crucial for pricing and transaction purposes. Scale and weighing systems are employed to measure the weight of incoming and outgoing materials.
  9. Dust and Fume Extraction Systems: Scrap metal processing can generate dust and fumes. Extraction systems are used to manage air quality by capturing and filtering out particulate matter and harmful gases.
  10. Computerized Inventory and Management Systems: Modern scrap yards often use computerized systems for inventory management, tracking the types and quantities of scrap metal on-site, as well as for recording transactions.
  11. Waste Water Treatment Systems: Some scrap metal processing operations may generate wastewater. Waste water treatment systems help manage and treat any water contaminated during the metal recycling process.
  12. Safety Equipment: Personal protective equipment (PPE) such as helmets, gloves, safety glasses, and steel-toed boots is essential for workers in the scrap metal industry.

The equipment and technology mentioned might be more relevant to scrap metal recyclers. But for scrap metal collectors and intermediaries, these are the most important equipment needed for your scrap metal business:

  • Mobile Transportation: Wheelbarrow, Pickup Truck or Van, Hand Trucks or Dollies
  • Collection Tools: Magnet, Gloves and Safety Gear
  • Cutting and Separation Tools: Cutting Torch or Reciprocating Saw, and Bolt Cutters
  • Containers and Bins: Metal Bins or Drums
  • Scale: Manual or Digital
  • Safety Equipment: Hard Hat and Steel-Toed Boots
  • Fenced Yard or Storage Space

Efficient equipment not only improves productivity but also contributes to the overall profitability of your business.

6. Implement Environmental and Safety Protocols:

Given the nature of the scrap metal recycling business, it’s essential to prioritize environmental sustainability and safety.

Implement protocols for the responsible disposal of hazardous materials, and ensure that your operations comply with environmental regulations.

Additionally, establish safety measures for your workers, emphasizing proper training and the use of protective gear.

The Process of Scrap Metal Recycling

The Process of Scrap Metal Recycling

The scrap metal recycling process involves several stages, from collection to processing and ultimately producing recycled metal for reuse.

Here’s a step-by-step overview of the typical scrap metal recycling process to the end users:

  1. Collection: Scrap metal can come from various sources, including construction sites, manufacturing plants, demolition projects, automotive scrapyards, and individual households. Scrap collectors, recycling companies, and individuals gather metal scrap from these sources. Collection may involve the use of trucks, containers, and specialized equipment depending on the scale of the operation.
  2. Sorting: At the collection site, workers manually sort the scrap metal into different categories based on type (ferrous or non-ferrous) and material (steel, aluminum, copper, etc.). Magnets are often used to separate ferrous metals (those containing iron) from non-ferrous metals.
  3. Transportation: Once sorted, the scrap metal is loaded onto trucks or containers for transportation to recycling facilities. Larger loads may be transported via flatbed trucks or rail.
  4. Processing: In some cases, the scrap metal is shredded into smaller pieces for easier handling and processing. Shredding is common for materials like cars, appliances, and structural steel. Non-ferrous metals such as aluminum, copper, and brass are melted in furnaces to separate impurities and create raw metal for further processing.
  5. Purification and Refining: Molten non-ferrous metals may go through refining processes to remove additional impurities and improve quality. Some metals, like copper, may undergo chemical processes to achieve higher purity.
  6. Casting: The refined metal is cast into ingots, blocks, or other forms, depending on the requirements of manufacturers.
  7. Quality Control: Recycled metal undergoes quality control checks to ensure it meets industry standards and specifications.
  8. Transport to Manufacturers: The recycled metal is transported to manufacturers or other businesses that will use it as raw material for new products.
  9. Manufacturing: Recycled metal is used in the manufacturing process to create new products. For example, recycled steel can be used in the production of new cars, appliances, or construction materials.
  10. Reuse: The manufactured products containing recycled metal are distributed and sold to consumers. These products, in turn, may eventually become sources of scrap metal for future recycling. And the cycle continues.

Challenges Of Scrap Metal Collection and Recycling Business

Here are the comon and major cahellenges of scrap metal collection and recycling business in Nigeria:

  1. Infiltration by informal collectors: The Industry is infiltrated by informal collectors and recyclers who don’t adhere to safety standards, environmental regulations, or ethical business practices. Thereby contributing to issues such as unsafe working conditions, environmental pollution, and unregulated trade.
  2. Low participation from both individuals and businesses: Low participation from both individuals and businesses as a result of limited awareness about the importance of recycling and the potential economic benefits of the scrap metal industry.
  3. Insufficient infrastructure: Insufficient infrastructure including transportation and storage facilities, hinders the efficient collection, sorting, and processing of scrap metal. Resulting in delays and increased operational costs.
  4. Security challenge for businesses in the industry: Scrap metal, especially copper and aluminum, is prone to theft and vandalism.
  5. Environmental and safety concerns: Some scrap metal recycling processes have environmental and safety implications if not managed properly.
  6. Lack of standardization in the industry: Inconsistent and poorly enforced regulations related to scrap metal collection and recycling in Nigeria result in a lack of standardization in the industry. leading to unfair competition and hindering the development of a sustainable and regulated sector.
  7. Market volatility: Fluctuations in global metal prices can impact the profitability of scrap metal recycling businesses.
  8. Limited Access to Finance: Many entrepreneurs in Nigeria face challenges in accessing sufficient capital to invest in the necessary equipment and facilities for a scrap metal recycling business.
  9. Inefficient collection system: Inefficiencies in the collection system, such as lack of coordination and planning, result in missed opportunities to gather scrap metal.
  10. Lack of training and education in the proper handling and processing of scrap metal.

Benefits Of Scrap Metal Collection and Recycling

Here are the benefits of collecting and recycling scrap metals:

  1. Resource Conservation: Recycling scrap metal reduces the need for extracting and processing raw materials from the earth. This helps conserve natural resources, including minerals and ores.
  2. Energy Savings: Recycling metal requires significantly less energy than extracting and refining metals from raw materials. The energy savings can be substantial, particularly for energy-intensive metals like aluminum and copper.
  3. Reduced Greenhouse Gas Emissions: Recycling metal produces fewer greenhouse gas emissions compared to primary metal production. This contributes to mitigating climate change and lowering the carbon footprint associated with metal manufacturing.
  4. Waste Reduction: Recycling scrap metal helps divert a significant amount of waste from landfills. By reusing metal materials, it reduces the environmental impact of disposal and promotes a circular economy.
  5. Conservation of Land and Habitat: Extracting metals through mining can lead to habitat destruction and environmental degradation. Recycling reduces the need for new mining operations, helping to preserve ecosystems and protect biodiversity.
  6. Job Creation: The scrap metal recycling industry creates jobs at various stages of the recycling process, including collection, sorting, processing, and manufacturing. This contributes to local economic development and employment opportunities.
  7. Revenue Generation: The sale of recycled metal provides revenue streams for scrap collectors, recycling facilities, and manufacturers that use recycled metal as raw material. This economic activity contributes to the overall growth of the recycling industry.
  8. Reduced Energy Intensity: The production of metal from recycled scrap generally requires less energy than producing metal from raw materials. This energy efficiency contributes to sustainable industrial practices.
  9. Preservation of Landscape and Water Resources: Mining and extracting metals can result in habitat disruption and water pollution. Scrap metal recycling helps minimize these environmental impacts, preserving landscapes and water resources.
  10. Promotion of Circular Economy: Recycling scrap metal is a key component of the circular economy, where materials are reused, remanufactured, and recycled to extend their lifecycle. This approach minimizes waste and promotes sustainability.
  11. Reduced Dependency on Imports: Recycling domestic scrap metal reduces the dependency on imported raw materials. This enhances a country’s economic independence and security by utilizing locally available resources.
  12. Metal Purity and Quality: Recycled metals can be of high quality and purity, often comparable to virgin metals. This makes them suitable for a wide range of applications in various industries.
  13. Innovation and Research Opportunities: The recycling industry fosters innovation in technologies and processes for collecting, sorting, and processing scrap metal. This creates opportunities for research and development in the field of recycling.

The Peak Season For The Scrap Metal Collection Business

The peak season for the scrap metal collection business can vary based on factors such as economic conditions, industrial activity, and weather patterns.

However, there are certain trends and periods when the demand for scrap metal tends to be higher. Factors influencing the peak season include:

  1. Construction and Demolition Projects: Spring, summer, and harmattan months are often peak seasons for construction and demolition activities. During these seasons, there is typically increased demand for scrap metal as a result of construction site clean-ups and demolition projects.
  2. Industrial Shutdowns and Maintenance: Some industries schedule maintenance and shutdowns during specific times of the year. These planned shutdowns lead to increased generation of scrap metal as equipment and machinery are decommissioned or replaced.
  3. Manufacturing Cycles: Certain manufacturing sectors may experience peak production during specific times of the year. The increased manufacturing activity results in higher amounts of scrap metal generated.
  4. Harvesting and Agricultural Activities: Agricultural equipment, such as tractors and machinery, may be decommissioned or replaced during the off-season or after harvest. This contributes to increased scrap metal availability.
  5. Weather-Related Factors: Seasonal weather patterns can influence the ease of outdoor activities, including construction and demolition. Mild weather conditions, such as those in spring and early fall, are conducive to increased scrap metal collection.
  6. Infrastructure Projects: Large-scale infrastructure projects, such as road construction and bridge renovations, often contribute to higher volumes of scrap metal. The timing of these projects impacts the peak season for scrap metal collection.
  7. Global Economic Trends: Economic factors, both domestic and global, can influence industrial production and construction activities. Periods of economic growth led to increased manufacturing and construction, boosting the demand for scrap metal.
  8. Metal Prices: Fluctuations in metal prices influence the behavior of scrap metal collectors. When metal prices are high, there is often increased motivation to collect and sell scrap metal.

Common Places where Scrap Metals can be collected

Here are common places where scrap metals can be collected:

  1. Construction Sites
  2. Demolition Sites
  3. Manufacturing Facilities
  4. Automotive Repair Shops
  5. Residential Areas: Especially for household appliances, old plumbing fixtures, and other home-related metal items
  6. Commercial and Retail Spaces
  7. Electronics Repair Centers
  8. Shipbreaking Yards
  9. Agricultural Sites: Scrap metal from the disposal of old machinery, tools, or equipment.
  10. Waste Transfer/deposit Stations
  11. Renovation and Remodeling Projects Sites
  12. Appliance Disposal Centers
  13. Metal Scrap Yards: Scrap yards themselves are primary locations for the collection of scrap metal.
  14. Utility and Power Plants: Especially during maintenance, repairs, or the decommissioning of equipment.
  15. Roadside Dumping Areas

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Final Thoughts on Starting a Scrap Metal Collections and Recycling Business

Starting a scrap metal recycling business in Nigeria requires a combination of industry knowledge, regulatory compliance, and effective business management.

With the increasing global emphasis on sustainability, the demand for recycled metals presents a promising opportunity for entrepreneurs in Nigeria willing to contribute to environmental conservation and build a profitable venture.

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