When the metal products we use in our daily life are no longer useful, they are either discarded or recycled for use in other products or projects. Because metals are a resource that can be recycled over and over again, with no loss of quality, recycled materials are just as useful to manufacturers and builders as newly mined and forged metals. Because of the unique nature of this element, collecting scrap metal for profit is a common and sometimes lucrative job.
Have you ever considered a scrap metal recycling business? While it is a capital-intensive business that requires thousands to tens of thousands of dollars in start-up capital and you need to have a lot of technical knowledge, it can be quite lucrative. Whether you want to recycle copper, gold, lead, nickel, silver or tin, to get your business off the ground, you must know the market and plan ahead.
Shredder Machine for Metal Recycling
Metal shredder is mainly used for crushing scrap metal, increasing its bulk density for transportation and recycling. This equipment is widely used in shredding paint drums, diesel drums, thin iron sheets, car shells, metal briquettes, metal plate scraps and other scrap metal materials.
How does metal recycling make money?
The scrap yard pays for classified recyclable scrap by pound and issues new prices daily. Metal recyclers earn money by sending sorted metal to recycling yards. Large recyclers sell processed, chipped, and shredded metal to industrial manufacturers by truck load for new products production.
Scrap metal recycling business plan
-Learn about the market
Is scrap metal recycling a viable business in your location? How many competitors are there in your area? What is the estimated amount of scrap metal in your market? Learn about them.
-Know the product
Do you want to open a regular metal recycling plant, or just focus on one or a few targeted metals? Understand the difference between ferrous and nonferrous metals.
-Setting up Shop
Before you start investing in a new commercial enterprise, make sure you talk to a lawyer and understand what licenses and permits are required in your city. You also need to know how to deal with issues such as taxes. There are also websites that will tell you what you must do to run this type of business. It does not matter where you find this information. The important thing is that it is correct and you must follow it.
-Collecting Scrap Metal
Once you have everything you need, you can start collecting scrap metal. Construction and demolition contractors have been producing large amounts of scrap metal. They’re willing to pay you to take them off their site. Second-hand car dealers, car shops and scrap yards continue to offer used cars for recycling.
-Economic Analysis
When starting a scrap metal recovery business, you need to do the right cost accounting and economic analysis if you want to build a business to generate profits, grow the business and possibly expand the business and start competing on a national scale.
When conducting cost accounting and economic analysis on scrap metal recovery business, you only need to critically examine the key factors of location, price and promotion. In fact, you have to review these key factors on a regular basis when running a scrap metal recovery business. If you really want to maximize profits and stay at the forefront of your industry, you need to have a proper understanding of your competitive position.
-Buy the equipment
A sufficiently large truck, van, or trailer is a necessary and useful aid in collecting scrap metal. Buy containers for different types of metal. Metal shredder helps break the metal down into smaller units. The baler can compress metal. The scales weigh the metal to determine the price. Buy a jumpsuit and some heavy gloves to protect you from dust and sharp metal fragments. Magnets can help identify ferrous metals. A wire stripper can relieve you of a great deal of wire stripping while you dispose of copper waste cables. You may also be interested in a copper cable pelletizer, which can separate cables into copper and plastic granules. These copper granules can be sold to remelting plants, refineries and so on.
Difference Between Ferrous and Non-Ferrous Metals
Before starting to collect scrap metal profitably, it is important to understand the difference between ferrous and non-ferrous metals. The difference lies in the presence of iron. Ferrous metals are magnetic and contain iron, which makes them stronger than their counterparts, while nonferrous metals are more flexible and resistant to corrosion.
Typical ferrous metal recyclers include old machinery, stoves, refrigerators, freezers and car engines. Meanwhile, nonferrous recyclables typically come from copper wires and pipes, brass fixtures, aluminum siding, chairs, and old computers.
How to build a successful metal recycling business?
- Know how to identify different types of metals such as copper, aluminum, iron, steel, stainless steel, brass, gold, and silver.
- Understand the price and market trends of each metal.
- Know how to separate metals from buildings, structures, cars and machinery.
- Have a driver’s license, may have a commercial license for large trucks and trailers.
- Basic knowledge of accounting.
- Good interpersonal skills, able to build relationships with metal buyers and sellers.
- If you have a large recycling facility, you know how to operate heavy machinery.
- Have basic inventory capability to maximize your profit.
Costs to open a metal recycling company
For an individual who wants to do some recycling on the weekend, you can do business on a fairly low budget. You’ll need a truck or van, a basic set of tools, including a cutting torch, safety gear, and any permits required by the local government, which can be done for around $40,000. If you want to open a scrap yard or a full-fledged recycling center, the investment quickly rises to at least $250,000, including land, scales, heavy trucks, heavy sorting equipment, employees and office buildings. Of course these costs are different in different countries.
How much profit can a metal recycling company make?
Recyclers’ profit margins have been shrinking over the past decade as competition in the recycling market has intensified. However, when you work in the market, find your scrap at as low a price as possible and sell it when demand surges, you can see a handsome profit. A small one-man side business can net thousands of dollars a year, while a large processing center can generate hundreds of thousands of dollars.