Scrap consists of recyclable materials left over from product manufacturing and consumption, such as parts of vehicles, building supplies, and surplus materials. Unlike waste, scrap can have significant monetary value.
Metal recycling and scrapping is a lucrative business for many, especially in tough economic times. While it's a dirty and possibly dangerous job, high metal prices can dictate large financial returns. Find out how to start a scrap metal business to decide if it can be a wise investment of time and resources.
Scrap metal business has three major priorities that should be first looked into before opening for business: the accumulation of scrap metal, the holding area, and the safety measures of the said holding area. Without these three, business may prove futile.
Scrap metal business may go by various monikers: metal recycling business, junk metal business, scrap metal recycling, scrap yard, waste metal recycling center, wrecking yard, breaker’s yard, etc.
In any case, starting a scrap metal business has a few fundamental rules that you may want to follow. This business is a very hands-on business, where owners and scrap workers work directly with the “product” – sometimes even handling junk and rusty pieces of metal.
Your first priority should be the accumulation of scrap: these are old, unwanted metal pieces that usually come from building supplies, discarded vehicle parts, and other surplus metal materials. Scrap metal is actually a very important commodity – and is usually almost always in demand for both production and recycling. Scrap metal or recycled metal is less costly than pure metal, and the market for scrap metal is expansive.
Scraps can be found almost everywhere – some are given for free, others have to be salvaged from wreckage or demolition sites, and others have to be bought outright. In order to remain competitive, owners of scrap metal businesses try to keep their rates low, and try to sell their scraps high.
As an owner of a scrap metal business, your second priority should be your holding area or the lot with which to hold all your scraps. Some people call it a scrap yard. Depending on the size and location of your holding area, your business may or may not be open to “browsers” or customers who wish to scan available scrap metal. Some scrap metal businesses allow browsers to walk into the holding area and extract whatever they need, provided that the customers supply their own tools for extraction, and that they waive any liability from personal injury during the extraction process.
Larger scrap metal businesses usually segregate metals by piles according to quality and its recyclable parts. Buyers of scrap metal then “bid” for a specific pile: something like an auction of sorts, where the highest bidder gets the pile he so desires. Sale of scrap metal is always measured by weight, and never per piece or item.
Some scrap metal businesses even have dual purposes. On one hand, they sell scraps to the highest bidders or browsers and the less desired pieces are inevitably sent to smelting companies. In both cases, there is always a fast exchange of money, making this a very lucrative business enterprise.
However, one great major concern, and one that should be the third on your priority list, is safety and security. Obviously, scrap metal holding area poses a lot of risks when it comes to physical injury. Haphazardly placed metal pieces may eventually topple over especially when “browsers” are covering the lot. There is also concerns regarding health and environmental issues – radioactive materials have been found in scrap metal yards before. As the owner of a scrap metal business, you and your people will most likely handle a lot of junk that came from unknown sources. It is best if you have protective gear or at least a contingency measure should something quite undesirable turn up in your holding area.
Instruction:
Step 1
Purchase a truck or van that is large enough to transport scrap metal pieces.It should be fully insured and in good condition to haul heavy materials, with an interior that won't be damaged by rust or sharp metal edges.
Step 2
Set up an area for metal recycling. Depending on how much and what type of items you plan to collect, this could be as small as a storage unit or trailer. If you want a large yard, you'll have to lease or purchase an open space. Either space must be secure to prevent theft and possible liability from falling on sharp pieces. You'll also need space to sort and process scrap.
Step 3
Start making arrangements to collect scrap. Sources include businesses that use and discard metal, homeowners throwing away items like refrigerators and air conditioners and construction sites. The federal government is also a source of metal recycling. Some businesses may require you to pay for metal you take.
Step 4
Advertise in the local newspaper, online sources like Craigslist, and through flyers handed out door to door. Let your neighbors know that you are starting a scrap metal business and ask them to send any discarded metal your way.
Step 5
Check metal prices regularly to be aware of what to charge and what to pay for scrap. Know the difference between different types of metal. There are big differences in value for copper, alloys and steel. Metal prices fluctuate, so it's important to keep up with values.
Step 6
Find collectors and processors of metal to sell your scrap to. A local scrapyard and recycling center are some options. You can also advertise scrap metal that you have for sale. If you decide to start a scrap yard, it can be open to the public at certain times for customers to browse and buy.
Step 7
Work out a schedule. Set aside time to sort and dismantle metal, as well as collect it and take it to the recycling center or buyer.
Step 8
Invest in protective gear. Dealing with scrap metal can be dangerous and subject to cuts, damage from rust, metal pieces falling down and causing injury, and even risk of radioactive and otherwise tainted pieces.
Step 9
Talk to your county or town about necessary licenses and permits. If you run a scrap yard or other area that is open to the public, you may have to deal with zoning issues like traffic, parking, and safety.
Step 10
Speak to an attorney about how to start a scrap metal business that is legal and above board. Find out how to handle taxes, accounting, registration with the IRS and other matters.
Step 11
Get insurance coverage for your vehicle and property. If you have a site that is open to the public, you'll have to cover liability issues. At the minimum, have customers sign liability waivers before entering the site.
Benefits of recycling scrap metals:
According to research conducted by the US Environmental Protection Agency, recycling scrap metals can be quite beneficial to the environment. Using recycled scrap metal in place of virgin iron ore can yield:
- 75% savings in energy
- 90% savings in raw materials used
- 86% reduction in air pollution
- 40% reduction in water use
- 76% reduction in water pollution
- 97% reduction in mining wastes
Every ton of new steel made from scrap steel saves:
- 1,115 kg of iron ore
- 625 kg of coal
- 53 kg of limestone
Energy savings from other metals include:
- Aluminium savings of 95% energy
- Copper savings of 85% energy
- Lead savings of 65% energy
- Zinc savings of 60% energy
Warning
- Great potential exists in the scrap metal industry for accidents in which a hazardous material, which is present in scrap, causes death, injury, or environmental damage. A classic example is radioactivity in scrap; see the Goiania accident and the Mayapuri radio logical accident as examples of accidents involving radioactive materials, which entered the scrap metal industry and some details of the behavior of contaminating chemical elements in metal smelters. Many specialized tools used in scrapyards, such as the Alligator shear which cuts metal using hydraulic force, can also be dangerous to untrained people.
Warning
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