Scrap metal is the waste material generated in the form of metals. Metals are mostly used in all kinds of things. Those remains of the metals after usage are called metal scraps. If one talks about India then 26.9 million tons of metal scrap was generated in the year 2013-14. It is expected that the industry will grow to many folds by the next 5 at 12.48%. The international scrap industry is quite huge and is spread in $500 billion business that employs nearly 1.5 million people.
The usage of metal scrap is very huge given the requirement it has. The recycling business of metal scrap is quite huge in the world. India too is a big market of this great industry that employs around 6-7 lakh people. The growing industry has huge future promises as well. Nearly 40% of the steel in the world is made from metal scrap therefore one estimate how big this market is. In this article you will get to know about scrap metal recycling business opportunity and profitable business plan to start your own metal recycling plant.
Scrap Metal Recycle Business Opportunity:
Scrap metals comprises of different metals like iron, steel, copper, brass, aluminum, alloy, nickel, bronze and many more except the precious metals. These metals are left unused as waste after different uses like in manufacturing industries that make utensils, frames, and different products using these metals. These metal scrap comprises in huge number and is very useful. What makes metal recycle business much in demand is the return it gives in comparison to any other recycling business.
Before you start the business you need to really understand that what you are going to recycle. It is also necessary to conduct a feasibility analysis test in order to understand exactly what it is to be into this business. There are many pros and cons of this business, some concerns, and issues that come in between for which one needs to have an idea. Here is a brief detailed metal recycling business plan.
Scrap Metal Recycling Business Plan:
There are major aspects into this recycle business which one has to look before one starts the business. Here are few questions that will definitely come into your mind.
How Should I start the Scrap metal recycling business?
For every start you need to come up with a detailed plan of what exactly you have to do so that you start getting the desirable result.
- The first thing to start is to make your mind is what kind of metal will you recycle. There are long series of metals that are recycled and are easy to do so therefore one has to make a choice of what type of metals one will recycle. It is necessary because to recycle different metals there is different technique, resources and methods involved and each of them require different amount of investment.
Decide what type of Recycling you will do:
There are different levels of recycling that is performed on scrap metals. Choose exactly what type of recycling do you want to do. Examples can be just segregating the metal based on their type, quality, etc. or just melting it into a particular shape.
There are different stages of recycling in metals like
- segregation of metals
- giving shape
- refining and polishing.
You can decide how much you can do. It is necessary because the level of recycling will decide the rate at which you will sell your recycled product.
What is required to start the Recycle Business?
Recycling Plant: After you choose what kind of metal you will recycle and at what level then you need to have a factory where you will install your recycle plant. Since you are recycling a metal therefore you need to have an open space that is big enough to install the recycle plant, store scrap metal, equipment, machines and finished products. Recycling a metal is considered as a heavy industry job therefore you need to have a factory like space.
Infrastructure: You need to have some good infrastructure to support your business. A closed place where your machines will operate. Place where you will put your recycled goods, place where you will segregate metals, and clean them and so on. You also need a ventilated space that matches the standard of a normal factory. Construct the infrastructure to the standards of a factory for safety issues.
Resources: There are different types of resources that is required in a recycling business. You should arrange them for your recycling plant. The first important resource includes:
- Metal Scrap: Team up with scrap pickers, scrap sellers, dumping ground owners and their likes so that you can get the required amount of metal scrap. Try it with individual scrap pickers as they will provide you the scrap in really low cost than a normal scrap seller. If your requirement is huge then you can contact will wholesalers who sell metal scrap.
- Equipment: You need to have all the required equipment for recycling like containers, compressor, grinder, refiner, heating tools, etc. It would be better if you have the latest equipment and not conventional as latest equipment will be highly productive.
- Machine: You need to have the required recycling machine. Generally there is no specific machine of recycling metal scraps as it is done in various steps. For example, you need a segregation machine, cleaner, melting machine, refining machine, shaping container, cooling area and so on.
Man Power: Despite being surrounding by so many machines you still you need man power to run your factory. You first need to hire an expert who will lead your recycle business as he will be well versed about the recycling job. Apart from him you need some labors based on the requirement. You may have to provide them prior training for metal recycling plant.
Utilities: Just like any other plant you need basic amenities like power connection, water supply, transport system to transport recycled goods, better roads, plant at a desired and preferable place and so on. In a metal recycling business and based on the place where you want to start your business, there may be other requirements which you may have to look in.
Documents and Permission: You are going to start a metal recycling business that will further be used by other manufacturers. Therefore you need to have permissions from different authorities. Firstly you need to have a metal recycling plant document where you also have to mention what kind of metal you will recycle. Secondly you need to take clearance from environmental authorities for pollution clearance. On later stage you may need permission for installing plant at a particular place, permission for utilizing power and ground resources.
After you get all types of permission then you need to register yourself as a business and also should enroll in to the Goods and Services Tax to pay regular tax on your sales and services. Documentation is very important as in absence of it you may land into trouble. Make sure you have all to run a smooth and successful business.
As one can assume that recycling metals is not a small level business therefore there will be a good sum of capital required to start your business. One can calculate it by calculating the cost requirement for different types of resources, utilities, man power and machines. For the factory, you can either own it or rent it. It is up to your choice and budget. In case if you have low budget then you must rent it and later on with the kind of investment you may own it.
The second important place of investment is infrastructure which you will have to spend some money on. Expect an expense of Rs 1-5 lakhs based on requirement. The third is resources. There are various resources like equipment, machines, techs, computers that can easily cost Rs 5 lakhs. You may ponder about hiring them which is eventually a good idea to save cost. You may entirely rent all the resources or you may rent few and own some like main machines which may not be available on rent. Machines do cost a fair amount of money.
These machines cost around Rs 1 lakh to 20 lakhs and more based on requirement. Choose the machine based on your requirement which means that your machine type should depend on what you are recycling, to what level you are recycling, quality of recycled product and quantity you are recycling.
Other expense includes paying expert, technicians, labors, transporters, drivers, office boy and other such staffs. You should also add the cost required in packaging and transportation. Monthly bill on power supply, water supply, various types of taxes, tax and so on should also be considered as necessary expense.
Scrap Metal Recycling Process:
There are various steps involved in recycling metal scraps. There are different methods of recycling in which you can follow whatever convinces you based on your skill power, man power and cost involved. There are different stages of recycling which may have to figure. Some recycling is done on primary stage where cleaning, melting and cooling is only required whereas there are other process where polishing, refining and finishing process is done. Each and every stage has different requirements and they do offer different returns.
The cost involved is also a matter of concern as the better recycling you will do the better cost will be required. The advantage in this is that you will get better return while selling your recycled product.
Market to Sell your Product:
You need to meet some people who are involved in this business to know about the market. You should make a network of such people who are involved in this. With time you will figure out the market where you will sell your recycled product. You need to be vigilant in this process as you may get some better market where your product can be sold in better price than the normal so keep on looking. What makes your market successful is the type and quality of recycled product you are supplying. As mention earlier that their various levels of recycled products and each of them are sold at different prices.
Return on Investment:
It will require at least a year when you will start getting returns and maybe few years when you will get the deserved return. One thing that is to your advantage is that the market is huge and expensive therefore your return will also be huge with time. Recycled metals are sold at good prices and they are directly used by the metal product manufacturing companies. It is estimated that 40% of the steel is made from scrap steel. Your return will also depend on the type of recycled good you are selling. The better the quality the better will be the return.