The prospects of the recycling industry
Wednesday, 16 September 2009
Mezbah Uddin Shaber
The global economic downturn, followed by the financial meltdown, has brought forward some industries. Renewable energy and recycling are two such major industries. The importance of these two sectors is further enhanced by the global drive to cut CO2 emission. This article deals primarily with recycling, in which Bangladesh has a big prospect.
Ship-breaking industry is indeed a great success story of Bangladesh. Still this sector supplies only about 60% of the raw materials for the steel industry of the country. A good amount of non-ferrous metal scrap like copper, aluminium, brass etc., are recovered from the ships. With this supply of non-ferrous scrap, the sector leaders also control the non-ferrous scrap metal market of the country. To help this sector and the primary metal importers, the import policy has some strange rules.
The current import policy of Bangladesh does not allow commercial import of all sorts of non-ferrous metal scrap. This policy puts a big hurdle for small & medium enterprise (SME) metal industrial growth. As the small factories cannot import their raw materials from abroad, they become marginal producers in an oligopolistic supply chain. This supply chain is mainly dominated by the ship-breakers and the primary metal traders. The complementary tariff policy has a tax incident of 27% for all non-ferrous scrap and primary metals, which again puts a barrier to marginal producer to penetrate the export market. They cannot even produce small metal accessories for the garment sector. For export purposes, the garment exporters can import all metal accessories at zero-tariff. In this case, the supplier country has zero import tariff for non-ferrous scrap which they use to make all sorts of metal accessories for the leather and garment sectors. We also import capital machinery with zero-tariff. But our manufacturers cannot manufacture these products, if these contain non-ferrous raw materials. They cannot make these products at a competitive price just for the high tariffs on raw materials.
After iron, aluminium is the second-most useful metal. Automobile and construction industries are the two main consumers of this metal. Our import policy allows only the recognised aluminium utensil manufacturers to import aluminium scrap (Ref: Import Policy Order 2006-2009, Sec 24.14.2). However, we possibly consume more aluminium profile in the construction industry than in utensil making. The preferential treatment of utensil making does not allow the aluminium industry to grow big and export value-added products. Instead, we still import aluminium profiles from counties which use imported recycled aluminium at zero-tariff.
The import policy encourages corruption. It is alleged that the importers bribe the customs officials while importing some percentage of non-ferrous metal scrap showing these as low-tariff iron scrap by altering HS code and price.
The import policy for the ferrous scrap is, however, good. The rule of thumb is that steel industry grows at a pace of gross domestic product (GDP) growth. In our case, it is doing even better than GDP due to local boom in the construction industry and informal trade with India's seven sisters. Backward linkage industry of ship-building can also grow at fast pace if rail scrap import is permitted. The outdated railways in the western world is a good source of high-quality iron for the ship-building industry.
Copper, aluminium, zinc, tin, lead, silver and gold are the most widely used non-ferrous metals in the world. The Known reserve of world's copper resources will last for another 60 years, silver 29 years, zinc 46 years while tin deposits will be exhausted in 40 years.
Mankind does not have any alternative but to recycle. Good thing is that these metals are highly recyclable in nature. Current research shows that about 40% of these metals come from recycling. So, only 60% of the global industrial supply for these metals comes from primary sources. Days will come when governments all over the world will be forced to think about the 100% recycle ability of the product from the research & development (R&D) phase of any product development.
Bangladesh has huge competitive advantage due to its low cost of labour. The main opportunity for Bangladesh lies in complex scrap processing. There are a lot of scraps which are quite impossible to disassemble by any machine and chemical process. Manual labour is the main tool to process such scraps. In fact, scrap ship is also one such product.
Automobile Engine scrap is one of the very complex products. Scrap automobile engines can contain 10-35% Al (aluminium), 88-63% cast iron and a small amount of copper, glass, plastic etc. Without manual labour, it is impossible to re-use these raw materials. In global market, it is far cheaper than the intrinsic value of the raw materials. China, India, Pakistan, Vietnam, Indonesia and the Philippine are the most successful countries in this business. The major exporters of this product are the European Union (EU), North America and Australia.
Automobile scrap is also furnished with a lot of small re-usable parts. In the developed countries, more than 80% automobile repair is done by reusable parts from old cars. This source of parts can bring down automobile repair cost.
Another complex scrap family is the electrical and electronic scrap. Scrap copper wire can be an excellent source of cheap copper for our thriving cable industry. Different sizes and shapes of copper cables are scraped in the developed countries when they demolish a big factory or house. The 99.99% pure copper cable is wrapped with plastics. Manual labour is the best way to recycle them. There are also electric motor, generator and transformer scrap which are loaded with high-quality copper wire (6.0-12%) along with cast iron, steel and aluminium. China, Pakistan and Vietnam harness these cheaper resources with greater success. The recycling of compressor, radiator and battery scrap is also very profitable. Overhead and underground aluminium wire (up to 50-50 mix of iron and aluminium) is an excellent source of cheap metals.
The most complex product of this family is the recycling of computers and electronics. This scrap also contains gold and silver in it. Advanced recycling facilities in developed countries are highly profitable in this business. China is also very successful in this sector with advanced recycling facility.
Electronic waste (e.g. computer, mobile, TV etc) are toxic and highly complex in nature. Bangladesh does not have any good mechanism to collect and recycle this waste. Let's do a simple calculation. The weight of your mobile set would be more than 100gm. If Bangladesh has 45 million mobile subscribers, then considering three-year life span of a mobile set, Bangladesh produces about 1500 ton of mobile phone scrap each year. But they are thrown away here and there, causing environmental problem. The government should take an initiative to guide the mobile phone operators in collecting this waste.
Research done by the Institute of Scrap Recycling Industries, Inc. (ISRI), USA gives some idea about the size of recycling industry in the USA. The recycling industry in the USA is worth about $86 billion dollar, employing 85 thousand people in 2008. The USA exported $28 billion worth of scrap to China, EU countries and some developing countries in the year.
(The writer, an engineer, has experience in working in Europe. He can be reached at: "Mezbah U Shaber" biz.mus@gmail.com)
The global economic downturn, followed by the financial meltdown, has brought forward some industries. Renewable energy and recycling are two such major industries. The importance of these two sectors is further enhanced by the global drive to cut CO2 emission. This article deals primarily with recycling, in which Bangladesh has a big prospect.
Ship-breaking industry is indeed a great success story of Bangladesh. Still this sector supplies only about 60% of the raw materials for the steel industry of the country. A good amount of non-ferrous metal scrap like copper, aluminium, brass etc., are recovered from the ships. With this supply of non-ferrous scrap, the sector leaders also control the non-ferrous scrap metal market of the country. To help this sector and the primary metal importers, the import policy has some strange rules.
The current import policy of Bangladesh does not allow commercial import of all sorts of non-ferrous metal scrap. This policy puts a big hurdle for small & medium enterprise (SME) metal industrial growth. As the small factories cannot import their raw materials from abroad, they become marginal producers in an oligopolistic supply chain. This supply chain is mainly dominated by the ship-breakers and the primary metal traders. The complementary tariff policy has a tax incident of 27% for all non-ferrous scrap and primary metals, which again puts a barrier to marginal producer to penetrate the export market. They cannot even produce small metal accessories for the garment sector. For export purposes, the garment exporters can import all metal accessories at zero-tariff. In this case, the supplier country has zero import tariff for non-ferrous scrap which they use to make all sorts of metal accessories for the leather and garment sectors. We also import capital machinery with zero-tariff. But our manufacturers cannot manufacture these products, if these contain non-ferrous raw materials. They cannot make these products at a competitive price just for the high tariffs on raw materials.
After iron, aluminium is the second-most useful metal. Automobile and construction industries are the two main consumers of this metal. Our import policy allows only the recognised aluminium utensil manufacturers to import aluminium scrap (Ref: Import Policy Order 2006-2009, Sec 24.14.2). However, we possibly consume more aluminium profile in the construction industry than in utensil making. The preferential treatment of utensil making does not allow the aluminium industry to grow big and export value-added products. Instead, we still import aluminium profiles from counties which use imported recycled aluminium at zero-tariff.
The import policy encourages corruption. It is alleged that the importers bribe the customs officials while importing some percentage of non-ferrous metal scrap showing these as low-tariff iron scrap by altering HS code and price.
The import policy for the ferrous scrap is, however, good. The rule of thumb is that steel industry grows at a pace of gross domestic product (GDP) growth. In our case, it is doing even better than GDP due to local boom in the construction industry and informal trade with India's seven sisters. Backward linkage industry of ship-building can also grow at fast pace if rail scrap import is permitted. The outdated railways in the western world is a good source of high-quality iron for the ship-building industry.
Copper, aluminium, zinc, tin, lead, silver and gold are the most widely used non-ferrous metals in the world. The Known reserve of world's copper resources will last for another 60 years, silver 29 years, zinc 46 years while tin deposits will be exhausted in 40 years.
Mankind does not have any alternative but to recycle. Good thing is that these metals are highly recyclable in nature. Current research shows that about 40% of these metals come from recycling. So, only 60% of the global industrial supply for these metals comes from primary sources. Days will come when governments all over the world will be forced to think about the 100% recycle ability of the product from the research & development (R&D) phase of any product development.
Bangladesh has huge competitive advantage due to its low cost of labour. The main opportunity for Bangladesh lies in complex scrap processing. There are a lot of scraps which are quite impossible to disassemble by any machine and chemical process. Manual labour is the main tool to process such scraps. In fact, scrap ship is also one such product.
Automobile Engine scrap is one of the very complex products. Scrap automobile engines can contain 10-35% Al (aluminium), 88-63% cast iron and a small amount of copper, glass, plastic etc. Without manual labour, it is impossible to re-use these raw materials. In global market, it is far cheaper than the intrinsic value of the raw materials. China, India, Pakistan, Vietnam, Indonesia and the Philippine are the most successful countries in this business. The major exporters of this product are the European Union (EU), North America and Australia.
Automobile scrap is also furnished with a lot of small re-usable parts. In the developed countries, more than 80% automobile repair is done by reusable parts from old cars. This source of parts can bring down automobile repair cost.
Another complex scrap family is the electrical and electronic scrap. Scrap copper wire can be an excellent source of cheap copper for our thriving cable industry. Different sizes and shapes of copper cables are scraped in the developed countries when they demolish a big factory or house. The 99.99% pure copper cable is wrapped with plastics. Manual labour is the best way to recycle them. There are also electric motor, generator and transformer scrap which are loaded with high-quality copper wire (6.0-12%) along with cast iron, steel and aluminium. China, Pakistan and Vietnam harness these cheaper resources with greater success. The recycling of compressor, radiator and battery scrap is also very profitable. Overhead and underground aluminium wire (up to 50-50 mix of iron and aluminium) is an excellent source of cheap metals.
The most complex product of this family is the recycling of computers and electronics. This scrap also contains gold and silver in it. Advanced recycling facilities in developed countries are highly profitable in this business. China is also very successful in this sector with advanced recycling facility.
Electronic waste (e.g. computer, mobile, TV etc) are toxic and highly complex in nature. Bangladesh does not have any good mechanism to collect and recycle this waste. Let's do a simple calculation. The weight of your mobile set would be more than 100gm. If Bangladesh has 45 million mobile subscribers, then considering three-year life span of a mobile set, Bangladesh produces about 1500 ton of mobile phone scrap each year. But they are thrown away here and there, causing environmental problem. The government should take an initiative to guide the mobile phone operators in collecting this waste.
Research done by the Institute of Scrap Recycling Industries, Inc. (ISRI), USA gives some idea about the size of recycling industry in the USA. The recycling industry in the USA is worth about $86 billion dollar, employing 85 thousand people in 2008. The USA exported $28 billion worth of scrap to China, EU countries and some developing countries in the year.
(The writer, an engineer, has experience in working in Europe. He can be reached at: "Mezbah U Shaber" biz.mus@gmail.com)