Optimism with a side of wariness

Several years’ worth of economic statistics portray India’s economy as one of the world’s fastest growing, and the nation’s metals production industry has benefited from the positive momentum.

Steel, aluminum, copper and brass made in India use their share of scrap metal feedstock, with emerging and medium-sized entrepreneurs there having shown a particular adeptness at using scrap to make recycled-content metal.

This overall positive landscape seems poised to yield an active global trade in recyclable metals for years to come. However, current and potential trade and environmental policies in India and abroad mean recyclers cannot take unbridled growth as a given.

First, the good news

Several panelists at the 2024 Material Recycling Association of India (MRAI) International Material Recycling Conference in Kolkata, India, in January discussed the likelihood of a bright future for the circular economy in India.

Presenters focused on current and expected increases in India’s gross domestic product (GDP) and, in some cases, on compatible growth in the amount of metals consumed per person annually.

Hitesh Agarwal, head of raw materials at India-based Jindal Stainless, said between 3 and 3.5 kilograms (kg) of stainless steel per person are consumed in India, which equates to about 6.6 to 7.7 pounds. That figure is poised to grow to 24.2 pounds per person by 2047, he said, noting India’s stainless steel production could rise from its current 4.6 million metric tons to 20 million or more metric tons by 2047.

Other panelists offered similar production growth scenarios. Regarding the use of zinc in India, Navneet Chadha of India-based VK Metcast Pvt. Ltd. said India currently consumes about 0.5 kg (1.1 pounds) per capita of the metal—a mere fraction of the global average of 2.5 kg (5.5 pounds).

Dhawal Shah of Mumbai-based Metco Marketing, who also is senior vice president of the MRAI, offered more encouraging figures for aluminum and copper. He said while India’s current per-capita aluminum consumption is 2.5 kg (5.5 pounds), the country has plenty of room to grow to meet the global average of 11.5 kg (25.3 pounds). In the copper sector, Indians currently consume 0.6 kg (1.3 pounds) per year, well below the global average of 3.2 kg (7 pounds).

Sean Davidson, founder of metals information service provider Davis Index, predicted consumption and demand for scrap metal grades around the world will increase. “The next 10, 20, 30, 40 years should just be fantastic for this industry," he said.

While many MRAI delegates were likely happy to hear that prediction, Shah noted India will rely on open and good trading relationships to keep its recycled-content metals output growing.

He called India’s secondary metals sector “import centric” and predicted India was at least 15 years away from self-sufficiency to generate consumption levels for most types of scrap metal. “The way forward is very, very exciting [for the metals sector in India],” Shah said.

But the challenges spelled out by Shah and other panelists involved regulatory hurdles and scrap availability in the future.

A less than free market

Along with market-based optimism in Kolkata was talk of current and future trade policies with the potential to create barriers to scrap flow across national borders.

The term “scrap nationalism” was used by several panelists to refer to government actions designed to keep scrap within jurisdictions using a variety of techniques.

Shah, a longtime MRAI officer, cited outright export bans as one of the most comprehensive techniques, with bans on some grades having been implemented several nations in the Middle East and in South Africa.

European Union policymakers have devised a system they claim offers environmental, health and safety benefits by prohibiting recyclers there from shipping scrap materials unless the overseas buyer can demonstrate compliance with EU environmental and safety regulations.

Shah said India receives as much as 35 percent of its scrap from the EU and raised the idea that protectionism rather than health and safety might have played a leading role in the new policy.

Shah said as circular economy success stories proliferate, the world “gradually realizes that these scrap [grades] are so valuable, [so] they are asking, ‘Why are we letting it go to India?’”

Another threat to India’s metals industry emanating from Brussels could be tied to the carbon border adjustment mechanism (CBAM) system being phased in by EU nations.

Arnaud Brunet, director general of the Bureau of International Recycling (BIR), Brussels, said the shipment of scrap itself is not regulated by the CBAM policy. Rather, by imposing a border tax on metals made at facilities with higher carbon footprints, CBAM could stem exports from and overall production of metal in nations with developing economies such as India.

Brunet said an objective of CBAM is incentivizing foreign producers to lower emissions. For recycled-content metals producers in India that can demonstrate a small carbon footprint, CBAM might not be a looming threat.

Policymakers in Washington have discussed imposing a CBAM-type system for the United States, but in the meantime, the threat to India’s scrap flows from the U.S. could be more market-based.

Shah said about 20 percent of India’s scrap comes from the U.S. and introduced fellow panelist Brian Henesey by asking about new nonferrous production capacity coming online in the country. Henesey, who is with Rocky Mountain Recycling, Commerce City, Colorado, serves as chair of the Washington-based Institute of Scrap Recycling Industries (ISRI) until the close of the association’s 2024 convention April 18.

Henesey discussed recent or upcoming recycled-content red metals capacity installations by Aurubis, Wieland North America and Prime Materials Recovery (Ames Copper), along with investments by Steel Dynamics Inc. (Aluminum Dynamics), Hydro, MetalX, Novelis Inc. and Spectro Alloys on the aluminum side.

Despite the investments, Henesey sounded optimistic that the U.S. recycling sector would remain open for business to buyers from around the world, including India, which currently is the No. 1 buyer of aluminum scrap exported from the U.S.

Uncertainty on the home front

What happens within India’s manufacturing and recycling sectors will be of interest for years to come, with one MRAI event presenter predicting India has at least 15 years before it reaches balance between scrap metal supply and demand.

While the recycling sector in India is expanding, it also receives unwanted attention in some cases.

Throughout last year, aluminum recyclers in India expressed negative opinions of a Bureau of Indian Standards (BIS) document intended to offer specifications for traded aluminum scrap grades. Suspicions have focused on the Indian primary aluminum sector suggesting standards that are not applicable or attainable in secondary aluminum.

In Kolkata, delegates heard from Vishal Kumar Rana of the BIS, who is working on a copper recycling set of standards. Rana referred to copper as a “critical metal” and said standards are important in the making of any product so it can be of the “desired quality.”

Rana, who said his process will involve “certain stakeholders,” received feedback from audience members urging him to make sure recyclers themselves were among those stakeholders. MRAI and its members have endorsed ferrous scrap standards that are authored cooperatively while remaining concerned about the future of the aluminum scrap standards.

One MRAI delegate told Rana he thought it “preposterous” that primary producers should have the dominant voice in composing a scrap standard.

At several educational sessions during the event, speakers called for India’s government to have one primary contact and advocate within the set of ministries that governs the nation; some even asked for a “one-stop shop.” Offering a presentation at the event was Farida M. Naik, a recently appointed joint secretary of India’s Ministry of Mines, one of the agencies involved in regulating the metals recycling sector.

After spending time at the event, which attracted 2,200 attendees and dozens of exhibitors, Naik said it had changed her perspective regarding the level of sophistication of the metal recycling industry. “I’m highly impressed,” she said.

Although Naik said rolling back an import duty placed on nonferrous scrap coming into India is not her ministry’s responsibility, she told delegates she had been in touch with India’s Department of Economic Affairs to discuss the matter.

Another welcome form of attention could be coming from the lending industry, according to presenter Amitrajit Sett, who is based in Kolkata for global bank HSBC.

Sett said the bank earmarked $1 trillion globally in sustainability funding, in part to help HSBC reach its own net-zero emissions target by 2050. He said HSBC has adopted sustainability as a theme, noting, “It is the future.”

Recycled metals producers in India and beyond will continue to cheer for such positive attention to outweigh the benefits of any unwelcome scrutiny.

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