Issues and opportunities

India’s economy in much of the 21st century has been a story of growth, development and success. Its steady gross domestic product (GDP) growth has included quickly rising numbers when it comes to the output of steel, stainless steel, aluminum and red metal alloys.

The nation, however, is not considered to have mined output or a sufficient scrap reservoir to produce the necessary metal units within its own borders to feed its furnaces, smelters and refineries.

For scrap-surplus nations, this has provided an opportunity. That opportunity is not unfettered, however, as Indian political parties and government agencies can look at an import need as a trade deficit issue or an economic weakness.

Those views—along with safety concerns surrounding traces of radioactivity or live ammunition in scrap and the fear of India being a “dumping ground” for the discarded materials of other nations—have resulted in an intermittent tug of war between the government and metals producing companies.

These competing interests provided the topic for much of the discussion at the 7th Annual International Indian Material Recycling Conference hosted by the Material Recycling Association of India (MRAI) at the Hotel Hyatt Regency Gurgaon near New Delhi in February.

Internal hopes, external needs

Presenters on the steel and ferrous scrap sector at MRAI, including one from India’s Ministry of Steel, were unanimous in saying the nation’s government is paying close attention to boosting scrap collection and processing within the nation, including how end-of-life vehicles (ELVs) are handled. That was coupled, nonetheless, with predictions that imported scrap will still play a role in steel production.

Sujeet Samaddar of New Delhi-based Samaddar Consulting said India is importing at least 4 million metric tons of ferrous scrap annually, but he predicted “that number will easily double” in the next 11 or 12 years. He said India will soon take second place behind Turkey in terms of global ferrous scrap importers.

Samaddar and other MRAI speakers added that much of India’s opportunity to gather ferrous scrap domestically lies in the greater generation of ELVs and appliances that is beginning to take place.

Sanjay Mehta of manufacturing conglomerate MTC Group said “organized or formalized scrap collectors in this country who are capitalized well” are lacking. He added that the metal recycling rate and industry standards could be improved if informal recyclers were recognized by the Indian government.

In addition to recycling that goes undocumented, Mehta speculated that “at least 30 percent of scrap [metal] is lying in waste bins.” He said informal sector tracking and a government education program on the value of scrap metal were “small hurdles that can be taken care of by policy.”

Ruchika Chaudhry of India’s Ministry of Steel said production forecasts mean demand for imported scrap and domestic scrap are likely to grow. She said the ministry is studying how to modernize the scrap industry “to ensure that scrapping is done in an environmentally friendly way and in the most efficient manner possible.”

That effort includes “the government taking up rules to make scrapping centers more organized to facilitate more capital investment, including shredders,” Chaudhry said. “This needs to happen in the very near future; this is the only way we can ensure quality scrap.”

As of 2020 on the ELV front, Samaddar said, “A lot of useful material that is lying on the road needs to be brought back into the economy.” He said progress needs to be made “at the collection center level, at the depollution, dismantling level [and] at the materials recycling level.” All this, he added, “might take some time.”

On a recent trip to Japan, Samaddar said he saw 50-acre facilities that could create clean, foundry-grade scrap materials all on one large site.

“We should aspire to meet and better those standards,” he said. However, Samaddar added, “To find that land from government sources or the private sector is, believe me, a big, big challenge.”

Panelist Robin Wiener, the president of the Washington-based Institute of Scrap Recycling Industries (ISRI), described India’s opportunity to establish new rules and policies as “exciting,” adding that the MRAI, the Indian government and private sector leaders are wise to “plan for the future because it comes very quickly.”

Wiener said it is important for the MRAI to dialog with automakers “to find out what’s in that car, so there are no surprises [such as toxic materials] when recycling that car.”

She said the words used by recyclers and policymakers are important, adding that it is “critical for governments to recognize what you do and also what you’re not.” A key point, Wiener said, is “scrap is not waste but a critical resource for the circular economy.” MRAI members are not involved in waste management, she added, “and to have that distinction is critical.”

In terms of lessons to be learned from the United States, Wiener pointed to the recycling equipment depreciation tax credit as a policy that can help Indian recyclers invest in helpful technology. She also urged them to trade based on ISRI specifications and urged Indians to be involved in updating the specs, which she called “a living document.”

Keeping aluminum moving at high speed

Aluminum producers and recyclers in India have encountered several regulatory, taxation and pricing barriers in the past few years, but panelists at MRAI sessions indicated the sector remains committed to higher volumes of recycling.

Mohan Agarwal, managing director of Faridabad, India-based Century Metal Recycling Ltd., said his company’s expansion plans “have not really been affected” by a recent government ministry’s consideration to double the duty on imported aluminum scrap. Century is one of the largest consumers of aluminum scrap in India. “Scrap is the future, and [so is] recycling,” he told MRAI delegates.

Agarwal expressed hope that secondary producers such as Century and India’s primary aluminum producers could “coexist,” despite recent lobbying by primary producers to increase the scrap import duty.

Of inbound scrap quality, he said, while it “can always be made better,” the material already was preprocessed and not an environmental threat. “This is not waste which is coming, it is really recyclable scrap that is coming into the country,” Agarwal added.

Anil Agarwal of primary producer Jindal Aluminium Ltd., headquartered in Bengaluru, India, and one of Mohan Agarwal’s fellow panelists at an MRAI session, said the primary industry also pays duties on its imported inputs, and this is what “allowed the secondary producers to grow in the country” in the past two decades.

Anil Agarwal said primary producers don’t object to the import of scrap, but he contended that an increased import duty on it would help create a more level playing field between primary and secondary producers in India.

A panelist from the Jawaharlal Nehru Aluminium Research Development & Design Centre (JNARDDC) in Nagpur, India, said JNARDDC studies point to the growth of India’s vehicle sector as requiring increasing amounts of secondary aluminum alloys. This, in turn, means India will need more imported aluminum scrap even if it is able to generate more scrap within its own borders.

The JNARDDC researcher said the vehicle sector consumes from 60 percent to 70 percent of the secondary aluminum produced in India. He said the two sectors working together “presents a good example” of a circular economy loop being put in place.

Panelist Doug Kramer of Los Angeles-based Spectrum Alloys LLC said China’s massive rise in aluminum production had made profitability “increasingly difficult” for aluminum producers in the U.S. and elsewhere. In the U.S., where aluminum scrap is generated in abundance, he added, many producers in the past 20 years have turned to using more scrap.

Kramer added that even with its reclassification of some scrap metal as a resource, China’s consumers and its government will continue to demand high-purity scrap, which will favor recyclers who pay attention to quality.

Century Metal Recycling’s Mohan Agarwal said China’s reclassification occurred “because they realize scrap is so important, and they should not have any restrictions on the free flow of it.” The change will help Chinese secondary producers—and possibly raise aluminum scrap prices—he said.

Mohan Agarwal added, however, that “a lot of loss of trust” may have occurred between Chinese buyers and recyclers around the world because of the suddenly shifting regulations and procedures there in the last few years. “I expect some customers who did shift away from China will remain” active in India’s market, he said.

The outlook at the 2020 MRAI meeting seemed unanimous: As long as India’s economy and vehicle market hold steady or grow, metals producers are likely to need imported scrap metal for the foreseeable future.

The author is senior editor with the Recycling Today Media Group and can be contacted at btaylor@gie.net.