The UAE is among the top ten suppliers of ferrous scrap in the world. Scrap metal comes from different sources, including manufacturing, household goods, automobile, and foreign markets. Items from Africa, South Asia, and, far East are often exported to the UAE and then sold as scraps worldwide.
According to the British Metal Recycling Association (BMRA), nearly 400 million metals recycle worldwide each year. Furthermore, metals constitute one of the most critical aspects of landfill waste as governments and people are becoming environmentally conscious. Therefore, scrap metal will remain in limited supply.
Before starting a scrap metal recycling business, you must take into account three significant considerations. These include the amount of scrap metal, the holding area, and the safety measures in that holding area. Moreover, you also need to identify buyers to understand their persona and define your target market accordingly.
What is the cost of starting a scrap metal shop?
An entrepreneur thinking of starting a scrap metal shop has a lot of options. You can specialize in scrap metal sales and run a warehouse that sells recycled metals to scrap metal companies. Alternatively, focus on a specific type of scrap metal collection and recycling. Metals are commodities, and their rates change due to supply and demand. This is usually focused on supply and demand predictions for different types of metals a year or more in advance.
Overall, this is an excellent capital-intensive business. Thus, the initial investment ranges between a few thousand dollars to hundreds of thousands of dollars. This business requires a high technical knowledge, and it can be highly profitable. Whether you’d like to recycle copper, gold, lead, nickel, silver, or tin – the choice is yours. And everything boils down to your understanding of this industry.
How to begin a scrap metal business in Dubai?
Here’s how you can start your scrap metal shop in Dubai and make a name for yourself in the marketplace:
1. Rigorous market analysis
Identifying your scrap metal industry role is the first step to beginning your own scrap metal business. Can you collect local scrap to sell abroad? Would you like to import the scrap and then sell it? Do you have any strategy to process the scrap internally? The above procedures necessarily require an entirely different type of setup, so we recommend consulting with a business consultant before starting.
Let’s concentrate on a relatively straightforward type of scrap metal trading that is popular in the UAE for the sake of simplicity. Let’s say your company buys scraps of copper, aluminum, as well as other metals from newly abandoned homes, as well as waste generation metal. After that, you clean and sort the scrap before exporting it to one of the neighboring countries, where a majority of the UAE’s scrap metal ends up due to the country’s growing economy. You need to gather all this knowledge through rigorous and extensive market analysis.
2. Finding the appropriate business space
The cost of creating your company’s premises is affected by a combination of factors. If you’re leasing a warehouse or a yard, you’ll want to think about the annual rent. A forklift, metal sorting bins, shipping containers, specialist sorting equipment, solid waste management, or other items might also be required. Moreover, your team will most likely be dealing with a bunch of information through unknown sources. Furthermore, if something unfavorable occurs on your property, it’s best to invest in security equipment and emergency plans.
3. Obtain the license
If you apply for a free zone license, you would be limited to a small number of companies managing such waste. Remember that you should follow all relevant environmental, preventive, and capital regulations. The most significant advantage of having a free zone license is that you own your business outright. A local license is acquired through the Dubai Department of Economic Development, but this will require a local sponsor who’ll have 51 percent sharing of the company.
However, when you do business in the domestic scrap market, you’ll get more options. Shuraa Business Setup can become your sleeping partner so that you enjoy 100% operational ownership of your company. The most important thing to remember is that, depending on which licensing choice you select, you would be subject to various laws and permits based on the type of scrap metal you manage. These laws vary and are subject to continuous examination.
4. Carry out your business activities
Once you have the desired license and all the decisions regarding business space and company structure are finalized, you’re all set to start with the business activities. You can quickly launch your metal scrap company to take advantage of regional and global developments with the correct planning and a skilled advisor on your side. South Asia’s economy is booming, and it’s the leading destination for the UAE scrap, so the export possibilities are plentiful. You would not only benefit, but you’ll also be helping in making the world a better place for coming generations by recycling metals.
Benefits of establishing a scrap metal business in Dubai
1. Energy conservation
When comparing recycled metals to new ore, the total energy saved could be as high as:
- 92% for aluminum
- 90% for copper
- 56% for steel
According to the US Environmental Protection Agency, recycling a single aluminum product will save enough energy to power a 60-watt bulb for even more than four hours. Therefore, it’s a type of business that’s bound to gain pace in the near future.
2. Economic benefits
According to the National Recycling Coalition, recycling metal creates 36 times more jobs than sending the same volume of metal waste to an incinerator and six times more jobs than sending it to a landfill. Moreover, the authority also informs that the recycling industry generates $236 billion in annual revenue and hires upwards of a million people. So, it’s a no-brainer that the scrap metal industry is lucrative and full of opportunities.
3. Environmental benefits
Metal recycling helps protect natural resources by minimizing greenhouse gas emissions and consuming less energy than extracting metal from virgin ore. As opposed to producing goods from recycled materials, the manufacture of new metal generates much more greenhouse gas emissions. These emissions can influence climate change and harmful air pollution levels in cities, causing potential respiratory health issues for you and other city people. As per the Institute of Scrap Recycling Industries (ISRI), recycling metal may reduce greenhouse gas emissions by 300 million to 500 million tonnes. The scrap metal recycling business is a visionary approach that addresses an underlying noble cause as well.
Consult with Shuraa
We, at Shuraa Business Setup, target your company’s growth through our expertise and your willingness. Our business experts have helped more than 35,000 companies make a name for their brand in Dubai’s marketplace. If you’re looking to start a scrap metal recycling business but don’t know where to begin, simply connect with Shuraa. We’ll handle all your worries and ensure that you enjoy seamless business formation in the UAE. Consult with us today to get started with your dream business in Dubai.