The UAE is amongst the top ten exporters in the world of ferrous scrap. Scrap metal stems from the domestic market through the construction, household goods, the automotive and industrial sector as well as from regional markets.
Its quite common to see items imported from Africa, South Asia and the Far East shipped to the UAE and then sent out as scrap across the globe.
The British Metal Recycling Association estimates that close to 400 million tons of metal are recycled each year globally.
Metals constitute one of the largest portions of landfill waste, and with governments and citizens becoming more environmentally conscious, scrap metal will continue to be a hot commodity.
Your first step on the path to starting your scrap metal business is to understand what your role will be in the sector.
Will you source local scrap to export overseas? Do you intend to import and subsequently export the scrap? Do you intend to do any processing of the scrap locally? Each of the aforementioned practices requires a slightly different type of setup therefore before you proceed, we would recommend having a discussion with a consultant.
For simplicity sake, let’s focus on a relatively simple form of scrap metal trading commonly found in the UAE.
Let’s suppose your business acquires scraps of copper, aluminium, and other metals from recently demolished buildings as well as waste metal from construction sites. You then clean and organise the scrap and dispatch it to India where a majority of UAE scrap goes to due to its booming economy.
To set up a business that can provide such services, you have the option to set up a local license or a free zone license.
If you go for a free zone license, you will be limited to the few that can handle such forms of waste. Keep in mind that you will have to abide by applicable environmental, safety and capital requirements. The main benefit of having a free zone license is that you will have 100% ownership of the company.
You can opt for a local license through the Dubai Department of Economic Development but will require a local national to have a 51% stake in the business. However, you will have greater flexibility in doing business within the growing domestic scrap sector. We can help you find a local partner for your business venture.
The most important thing to understand is that whichever licensing option you select, there are many regulations and permits that may be required depending on the type of scrap metal that you are handling. Unfortunately, we can’t delve into this deeper as they vary and are subject to review on an ongoing basis.
As far as the cost of setting up the premises for your business, that depends on several factors. If you are going to rent a warehouse or a yard, you will need to consider the yearly rent. You may need equipment such as a forklift, metal sorting bins, shipping containers, specialist sorting equipment, waste management system, etc. Your staff will most likely handle a lot of material that may come from unknown sources. It is best if you invest in protective gear and contingency measures should something undesirable turn up at your premises.
With the right planning and a seasoned consultant at your side, you can confidently launch your metal scrap business to take advantage of regional and global trends. On a local level, the construction fueled by the Dubai World Expo in 20202 is expected to generate considerable amounts of scrap. With South Asia’s economy booming and with it being the prime destination of UAE scrap, the export opportunities are substantial. Not only will you generate a profit, but you will also be doing your part by recycling metals to make the earth a better place for future generations.