It turns out several Zimbabweans are making money from scrap metal. It is a typical recycling business but it seems most people are not recycling scrap metal as such. The majority simply sell the scrap metal which ideally is not the most lucrative approach. In other words, most people who are into scrap metal locally are simply scrap metal vendors. Anyways, here in shall be discussing this interesting line of business. I will be looking at how people mostly do the business and I will touch on some noteworthy talking points.
Categorization Of Scrap Metal
I am not going to go much into the technical details here. I just want to highlight the basic things you need to know about scrap metal before you get into the business. There are two broad categories of scrap metal – ferrous and non-ferrous. If a piece of scrap metal can attract a magnet then it is a ferrous metal. If it does not then the piece of scrap metal is non-ferrous. Examples of ferrous metals are iron and steel. Examples of non-ferrous metals copper, stainless steel, aluminium, and brass.
Copper is particularly very valuable but it is tricky to sell. This is because it is a key target of theft so you might end up in trouble after buying stolen goods. It is advisable to deal with copper if you are licensed. The important thing to know is which ones have a higher market value. It is the non-ferrous metals that have a higher market value. Ironically the lion’s share of scrap metal that is usually provided by people is ferrous metal. So you must bear this in mind if you ever start the scrap metal business.
Importance Of Scrap Metal
The law of the conservation of energy stipulates that energy is neither created nor lost. Essentially this means that energy cannot be destroyed – it can just be transformed from one form to another. This is a vital premise for recycling in general – what is considered waste can be reused. Scrap metal is a valuable waste product that can be recycled to make a wide range of products including the metal itself.
Just to give perspective on how important it is, here is what I recently discovered. I was chatting with someone who is into the scrap metal business. They indicated that their sole market is in South Africa. It is because it is now hard to find scrap metal in South Africa. It seems local, recycling is not capacitated well enough which is why we can somehow export lots of scrap metal.
It is worth mentioning though that local steel manufacturers once complained about the continued export of scrap metal to South Africa. They even proposed that the export of scrap be banned – it has been a heavily contentious issue for a while now. They were failing to meet their targets due to a lack of adequate scrap metal. I will briefly touch on this dynamic a little later.
How The Business Is Conducted In Zimbabwe
There are those (like the one I spoke to) who buy scrap metal from anyone willing. They then sort it and load it into trucks and send them to South Africa. It is a line of business that requires lots of capital if you are looking to buy and then export. You would need general hands to help you and of course the money to pay when people come to you with their scrap metal. You will require money to hire trucks to transport the scrap metal from here to South Africa. This is one approach where you will run it solely or in partnership with other people.
The second approach entails being an agent of sorts. You will be bankrolled by a financier to buy scrap metal from people. The business model is simple – you earn a percentage of the sales you realize. Some of the people using this business model operate as agents of Chinese individuals or corporates. This is somewhat easier in that you do not have to stress about putting together money and all. However, I feel you can make more from the business doing it yourself.
Let Us Look At Some Math…
In Zimbabwe, some people who buy scrap metal for later resale can pay roughly US$100 per tonne. This is why so many people are now making a living from selling their scrap metal. I will throw in some more numbers so that you get a feel of the business prospects of scrap metal. In South Africa, scrap metal prices average the following, aluminium (R17/kg), brass (R37/kg), Copper (R57/kg), Iron (R12/kg), and Steel (R40/kg).
Competitive Pricing Is The Answer To The Export ‘Problem’
Earlier I spoke of the issue of Zimbabwean steelmakers lobbying for the banning of scrap metal exports. I think that is coming from a space of an apparent problem but banning is not a solution. Business is always about sustainable profitability. The reason people are mopping up scrap metal locally and exporting it to South Africa is that that is the most profitable avenue. If Zimbabwean steelmakers want to abate scrap metal exports they should offer a more competitive alternative. For what is worth, exporting the scrap metal is no easy feat and people would prefer to sell locally if it is most profitable.
The details I have discussed herein should help form a basis for understanding what the scrap metal business is all about. I would encourage you to do further research, preferably by engaging those already in the business. From what I have gathered so far there is lots of money to be made in this line of business.