The Association considers such initiatives unreasonable and extremely dangerous for the scrap industry. The pipe producers union explains the need to introduce restrictions on a possible shortage of metallurgical raw materials during the period of quarantine measures in the country, which is not true. At the moment, there are no recorded cases of metallurgical plants shutdown or disruptions in production due to lack of scrap.

At the same time, there are currently no prerequisites for an increase in steel production, since the world has seen a slowdown in the economy and a significant decline in demand for metal. The initiators of the restrictions introduction lack substantiated arguments in the form of real contracts, applications or requests, government orders and other weighty legal grounds that confirm plans for the growth of metallurgical production in Russia and the lack of the possibility of acquiring scrap without taking prohibitive measures.

For an objective assessment of the situation RUSLOM.COM prepared a balance of procurement and consumption of ferrous scrap for 2017-2019, with a forecast for 2020. For calculations, we used data from metallurgical plants for the transportation of ferrous scrap, including rail, road and water. For analysis, we took the Russian Railways database, data from the Federal Customs Service of Russia, expert estimates, and the results of monitoring the opinions of scrap market players through a survey and questionnaire. Calculations were made on the use of scrap in the metallurgical charge for each of the plants.

The data obtained indicate that in the period from 2017 to 2020, the peak of scrap procurement and consumption in Russia was in 2018. In 2019, there was a decrease in the procurement of scrap of ferrous metals compared to 2018 by 1 million tons. This was due to two factors. The first of these is the global trend to reduce the consumption of finished metal products, which has spread to Russia. But to a greater extent, the reduction in procurement occurred due to the restriction of export of ferrous scrap from the country, introduced in September 2019.

This undermined scrap procurement in the country, and metallurgists did not fulfill their promises and, as a result, reduced, rather than increased, steel production. As a result of the restrictions, the Russian federal budget incurred customs losses in excess of 340 million rubles and 6,8 billion US dollars in foreign exchange earnings. The inevitable closure of scrap stores and the loss of jobs in the regions followed.

At present, domestic consumption of ferrous scrap by metallurgical plants is less than 27 million tons and will decrease due to global trends by at least another 10-15%. At the same time, more than 45 million tons of scrap and waste of ferrous metals are generated annually in Russia, which indicates a significant reserve for the return of raw materials to the economy. There are more than 110,000 unauthorised landfills in Russia, in which more than 250 million tons of metals are buried. And it is this scrap metal that should change its current status – from the status of accumulated environmental damage to the status of raw materials for metallurgy, thanks to state support measures.

According to the results of 2020, due to a decrease in demand for Russian metal products, the needs of domestic metallurgists may be significantly reduced. In Europe and the USA, according to the results of the 2nd quarter of 2020, a drop in metal production is expected to reach 70%. At the same time, export will provide an opportunity to maintain the scrap collection infrastructure in a working condition. In addition to this, in a number of regions, due to the peculiarities of logistics, scrap export is the only option for it to be actually sold. An attempt to solve local industry problems of certain consumers through quotas for the export of ferrous scrap will reduce the volume of scrap exports in 2020 by more than 29%.

Into addition, the introduction of quotas can be a direct threat to maintaining social stability, especially in the regions of Russia with low average per capita incomes. Scrap and metal waste management activities provide jobs for more than 60 thousand qualified professionals throughout the country, and make it possible for another 2 million people at least who are handing over scrap, to make a living.

Kazakhstan provides a vivid example of the consequences which export restrictive measures may have on the sector and the economy as a whole. The ban on exports had an extremely negative impact on the transparency of the scrap industry and production indicators. In Kazakhstan, scrap smuggling is recorded annually in the amount of 1 million tons, the price of scrap doubled due to a drop in collection by individuals and legal entities, metallurgical plants reduced production.

RUSLOM.COM clearly stands against the introduction of restrictive measures and is doing everything possible to convey the position of the industry to government representatives. Thus, the Association has already sent to the Department of Metallurgy and Materials of the Ministry of Industry and Trade of the Russian Federation a response to the proposal to introduce a temporary quantitative restriction on the export from the Russian Federation of waste and scrap of ferrous metals. In addition, a letter is being prepared to the Chairman of the Government of the Russian Federation Mikhail Mishustin.

The post National Recycling Association RUSLOM.COM: arguments against the possible restriction of ferrous metals scrap export from Russia appeared first on Ferrous and non-ferrous scrap & wastes processors and vehicle recyclers.

Scrap and metal waste management is a significant sector of the Russian economy, responsible for the raw materials security of metal industry as well as greening. The sector is regulated by Federal Law No. 89-FZ On Production and Consumption Wastes and various other Russian laws. According to the decrees of the Government of the Russian Federation scrap metal is an essential commodity for the domestic market of Russia and is included in the list of strategically important goods and resources.

The scrap industry in Russia today is:

• 60 thousand jobs, including certified specialists;
• more than 5000 enterprises with assets and technologies for processing scrap and ferrous and non-ferrous metal waste;
• over 15 billion rubles paid to the budget per year;
• 45 million tons of scrap per year, 60% of which is the resource base of metallurgy;
• more than 20,000 prevented hazardous scrap waste (explosive, radioactive, contaminated scrap) technological accidents per year.

The industry is facing the following issues:

1. The personal income tax on the income of individuals which they receive from gathering and supplying recycling materials. It acts not only as a strong demotivator but also as an obstacle to developing a system of separate collection and sorting of useful fractions. As the result metal is lost in landfills.
2. Low rates for the disposal of scrap and metal waste, set by the new environmental law (Federal Law 458-FZ). The rates should be increased to a minimum of 65-95% to effectively involve processors in the environmental reform implementation.
3. High railway tariffs for transportation of scrap and metal waste.
4. Underfunding of the industry. Due to underfunding banks regard this sector of economy as highly risky. This leads to loan rates of at least 20% rate and high tariffs on cash settlement services. The world practice shows that recycling industry is developing at a loan rate of not more than 3%.
5. The centralised regulation of the scrap industry was destroyed after the collapse of the Soviet Union. The licensing system is inefficient, prevents fair competition and impedes technological modernisation due to outdated requirements for equipment and staff. Moreover, in 2016 an additional license for management of hazardous waste was introduced. In this regard, territorial licenses for scrap metal management have become an overload.

The benefits of using scrap as a metallurgical raw material

What is the economic effect from the use of scrap as a raw material for the metallurgical industry?

Involving metal waste in recycling is much more cost-effective than smelting metal from ore. About half of world’s steel production is smelted from secondary ferrous metals, and the share of scrap metal in the charge of electric steel production is 95%. The share of a metal charge (cast iron and secondary ferrous metals) in the cost of steel is more than 80%, and that is why secondary ferrous metals are highly important for the metallurgical industry and enterprises with steelmaking and iron foundries.

Reusing the metal allows to achieve significant cost cutting. The reason is simple: to develop scrap processing requires much less capital investment than to explore, mine iron ore and coal, create concentration and sinter plants, blast furnaces and ferroalloy workshops. Usage of 1 ton of prepared scrap metal saves over 1800 kg of iron ore, sinter and pellets, 500 kg of coke, 50 kg of fluxes, about 100 m³ of natural gas on average.

Foreign currency earnings from export of metal scrap also play an important role both in developing domestic production and boosting the import of consumer goods.

How usage of scrap improves energy efficiency of metallurgical processes

The use of scrap in metallurgy can reduce cast iron volumes required for steel production process, thereby increasing the energy efficiency of production. It also allows to significantly reduce energy consumption in non-ferrous metallurgy: aluminum – by 95%, copper – by 83%, steel – by 74%, lead – by 64%, zinc – by 60%.

Environmental benefits

Compared to smelting iron from ore, using scrap lowers environmental load by significantly reducing total industry emissions into the atmosphere:

• when steel is smelted from metal waste, the amount of air polluting substances is reduced by 85%;
• when smelting from non-ferrous scrap metal, the amount of emissions is reduced by 5 to 10 times.

The Association works in close cooperation with the Government of the Russian Federation to propose solutions on how to improve the supply of metallurgical enterprises with secondary raw materials and meet the commitments made by the Russian Federation under the UN climate conference (Paris, December 2015) and the requirements of the Russian Government Plan on reduction of greenhouse gas emissions.

Sources of secondary metals

More than 45 million tons of scrap and waste of ferrous metals are generated in Russia annually. Based on the source of formation, ferrous and non-ferrous metal scrap can be divided into two types: working and depreciation. Working scrap is formed during the production of metals, machinery, equipment and various metal products. Depreciation scrap is formed as a result of depreciation of equipment at enterprises, as well as out of service household appliances and various metal items.

The largest amount of secondary metals (45%) is formed during production, 33% is formed during depreciation of equipment (liquidation of fixed assets, repair and replacement of equipment, tools and inventory) and 20% is from the metalworking process. Among various industries, the largest amount of ferrous metal waste is originated from mechanical engineering, shipbuilding, machine tool building and instrument making. These types of scrap are usually included in the turnover to be processed by the metallurgical industry enterprises.

There are more than 110 000 unauthorised landfills in Russia, with more than 250 million tons of metals buried.

Under current conditions, increasing collection and recycling of scrap requires incentive measures for separate collection and sorting of waste by citizens, with the subsequent delivery of secondary raw materials containing useful fractions. Useful fractions include scrap and waste of ferrous and non-ferrous metals generated in households, as well as landfill scrap refused by its owners.

The post Industry Review appeared first on Ferrous and non-ferrous scrap & wastes processors and vehicle recyclers.