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How to Start an Aluminum Scrap Recycling Business in India?

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by - 9/28/2021 1072 Views

This article focuses on the Aluminum Scrap recycling process, cost estimation in setting up of Aluminum Scrap recycling plant, and profit margin in this business.

Are you determined to kick off with a profitable and sustainable business? In this article, I have created a business plan sample so that you can use it in setting up your Aluminum Scrap recycling plant. This article also focuses on the Aluminum Scrap recycling process, cost estimation in setting up of Aluminum Scrap recycling plant, and profit margin in this business.

Aluminum is used in a huge variety of products, including cans, foils, kitchen utensils, building materials, window frames, consumer durables, electrical conductors, and airplane parts. According to International Aluminium Institute (IAI), 75% of the estimated 900 million tons of aluminum produced worldwide since 1880 is still in productive use. It’s clear that 75% of all Aluminium ever produced is still in use for its durability & recycling properties.

The quality of Aluminium is not impaired by recycling - it can be repeatedly recycled and hence Aluminum retains a high scrap value. Almost 100% of the Aluminum Scrap arising from the manufacturing of Aluminum products is being recycled. Thus, Aluminum Scrap is considered one of the most valuable scraps in the world.

The advantage of using recycled Aluminum is the cost-effectiveness, less usage of power, less usage of natural resources, and overall 100% recyclable. Therefore one can think of investing in the Aluminum Scrap recycling business.

What is the Cost to Start an Aluminum Scrap Recycling Plant?

Plan to Start an Aluminium Scrap Recycling Firm in India

Business Plan: Recycling Aluminum Scrap and Selling as Aluminum Ingots

The Capital Investment required in starting an Aluminum Scrap Recycling Business costs 7,523,000 INR, considering that it's done in an Own Building and using a fully Automated Machine.

The Capital Investment needed to start an Aluminum Scrap Recycling Business cost 3,161,000 INR, assuming that it's done in the Rental Building and using a fully Automated Machine.

Option A: Building Cost (Own Building)

Cost of the Land with road access: 300,000 – 500,000 INR per Cent (Depends on the area)

Area required for the Aluminum Scrap Recycling plant: 3400 Sq. ft. (Including Office, Rest Room and Storing the Aluminum Scrap)

Land cost for 3400 Sq. feet (Approximately 8 cents): 8 X 5,00,000 (land cost): 4,000,000 INR

The average rate of a commercial shed for an Aluminum Scrap Recycling plant: 200 INR/Sq. feet

Cost to set up an Aluminum Recycling Plant: 680,000 INR (3400 X 200)

Flooring and electric appliances costs: 50,000 INR

Fixed Cost of the Own Building is Rs.4,730,000

Option B: Rental Building

Area required for Aluminum Scrap Recycling Plant: 3400 Sq. feet

Land cost for 3400 Sq. feet area = 68,000 INR (Rs. 20/Sq. feet)

Advance for 6 months = 300,000 INR

Fixed Cost of the Rental Building is Rs.3,68,000

Machineries Required for Aluminum Scrap Recycling Plant

Option A: Buying Aluminum Scrap Recycling Machines Separately

Aluminum Scrap Baling Machine: 2,90,000 INR (Capacity 120 – 150 Ton)

Aluminum Scrap Shredder: 4,25,000 INR (Capacity – 1500-2000 Kg/hr.)

Furnace for Melting Aluminum Scrap: 8,00,000 INR (Capacity - All)

Molders for Recycled Aluminum Scrap: 3000 INR

Fork Lift to carry the Aluminum Scrap: 7,90,000 INR (Capacity 1.5 to 3 Ton)

Cost for Machineries: 2,308,000 INR

Option B: Fully Automated Machine

Industrial Aluminium Recycling Plant, Automation Grade - Fully Automatic: 20,00,000 INR (Capacity 8 Ton/ batch, Motor power 28 hp)

Total Cost to set up an Aluminum Scrap Recycling Plant: 2,793,000 INR (Including Automated Machine, Fork Lift and Moulders)

Cost for Automated Aluminum Scrap Recycling Plant: 2,793,000 INR

Operating Cost per Day

Operating Cost for recycling 8 Tons of Aluminum Scrap per day.

Mixed Aluminum Scrap Price: 140 INR/Kg.

Cost of Aluminum Scrap for 8 Ton/day: 11,20,000 INR (8000 X 140)

Electricity Charges (6000 units required for 8 tons)54,000 INR (Rs.9/Unit)

Labour Charges: 5000 INR

Extra Charges: 1000 INR

Maintenance Cost: 1500 INR

Operating Cost per Day is Rs.1,181,500

Profit Margin per Day

Aluminum Ingots after removing 20% dross and metal loss: 6.4 Ton

Selling Price of Aluminum Ingots: Rs.219/Kg

Cost of 6.4 Tons of Aluminum Ingots: 1,401,600 INR (6400 X 219)

Margin: Selling Price of Aluminum Ingots - Operating Cost = 220,100 INR

Profit Margin per Day is Rs.220,100

Operating Cost per Month (20 Working Days)

Cost of 8 Tons of Aluminum Scrap: 22,400,000 INR (8000 X 20 X140)

Electricity Charges: 1,084,500 INR

Labour Charges: 1,10,000 INR

Extra Charges: 2, 22,000 INR

Maintenance Cost: 50,000 INR

Electric/Fuel Costs: 100,000 INR

Operating Cost per Month is Rs.23,966,500

Profit Margin per Month (20 Working Days)

Selling Price of Aluminum Ingots: 28,032,000 INR (6400 X 20 X 219)

Margin: Selling Price of Aluminum Ingots - Operating Cost = Rs.4,065,500

Profit Margin per Month is Rs.4,065,500

Resources Required Starting an Aluminum Scrap Recycling Plant

To start an Aluminum Scrap Recycling Business, we need to plan for space, raw materials (Aluminum Scrap), machineries, power supply, manpower and techie to handle the machines. Let’s look at all those things in depth.

Space for Aluminum Scrap Recycling Plant

To start an Aluminum Scrap Recycling business, 3000 sq. ft. to 3400 sq. ft. space is enough. The better option would be to either rent the land or use your land for it. The most important condition is that the land must be 1 Km away from the radius of Agricultural, residential, water bodies, and other sensitive areas.

Basic Infrastructure for Aluminum Scrap Recycling Plant

A ventilated room is necessary to set up the Aluminum Scrap recycling machine. It must have proper safety norms, power connection, ventilation openings, tech support and other required tools. Apart from this, we need some extra space to keep the recycled product and the Aluminum Scrap that is needed for recycling. All this can fit in a 3400 sq. ft. area. Ensure that the space is enough so that it doesn’t cause any situation of fire accident.

Power Connection and Water Supply

Proper power connection and water supply are very much needed. Make sure that the area you have chosen to set up an Aluminum Scrap recycling plant has a regular power supply as its shortage may obstruct the business production. Also, ensure a proper supply of clean water for recycling purposes. Cleaning the Aluminum Scrap and recycled Aluminum may require a good amount of water.

Sources to Collect the Aluminum Scrap

Aluminum Scrap is 100% recyclable and it can be recycled repeatedly without losing its purity. Aluminum Scraps that are mainly used for recycling are Aluminum Sheet Scrap (ISRI Code TAINT), Aluminum Used Beverage Cans (ISRI Code TALDON), Aluminum Painted Siding Scrap (ISRI Code TALE), Aluminium Wire Scrap (ISRI Code TALON), Mixed Aluminum Scrap, Aluminum Extrusion Scrap (ISRI Code TALDON), Aluminum Radiators Scrap (ISRI Code TALLY), Aluminum Wheel Scrap (ISRI Code TROMA), Aluminum Utensil Scrap and more.

Visit Recycleinme.com to buy a large quantity of any specified Aluminum Scraps that you look for recycling.

                Watch the Latest Video about Aluminum Scrap Sell Offers

 

Also, you can collect Aluminum Scraps from local scrap yards, construction and demolition sites, End-of-Life Vehicles, vehicle shredding yards, etc.

From the pie – chart, it is clear that the transport sector is the major source of Aluminium Scrap, which is 42%. The building sector contributes 8% of Aluminum Scrap because of its durability. The other 28% of Aluminum Scrap comes from the packaging sector such as foils, wraps, and tins. The remaining 11%, from the engineering cables that are 98% pure aluminum.

Machinery Needed for Aluminum Scrap Recycling

I have listed the basic machinery that is needed for recycling any kind of Aluminum Scrap.

Aluminum Scrap Bailing Machine

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A baler compressor is a hydraulic machine that compresses the Aluminium Scrap that consumes much space. Aluminum Scraps are compressed using the baler into a square-shaped thick and heavy solid. This saves space and is easy to recycle.

Aluminum Scrap Shredder

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The shredders are used to cut Aluminum Scraps into small pieces for the volume reduction of bulky scrap.

Aluminum Scrap Smelter (Furnace)

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A smelter is used to extract aluminum by melting it in a smelter. This separates pure aluminum from the dross which is unwanted waste material.

Aluminum Ingot Moulder

Aluminum Ingot Moulder

The liquid form of Aluminum that is obtained through smelting is poured into the Mould to attain the shape of Aluminum Ingots

Other Equipment

Many other support gadgets are needed for Aluminum Scrap recycling like a power generator, a heater to produce heat to melt Aluminum, a container, coolant, boiler, fork lifter, etc.

There is also another choice for Aluminum Scrap recycling. In this current scenario, a fully automated Aluminum Scrap recycling machine is available for a low budget too. If you are interested in that, you can choose it for Aluminum Scrap recycling.

Man Power

To handle the Aluminum Scrap recycling machine, we need some experts, engineers, technicians, and laborers to operate it.

Where to sell the Recycled Aluminum Ingots?

You can sell the large production of Aluminum Ingots through our B2B Scrap Marketplace Recycleinme.com.

Aluminum ingots are largely purchased by the automobile industry to produce Aluminum Wheel Rims, Aluminum Auto parts, etc. Aluminum Ingots are also used for the manufacturing process of Aluminum products such as Aluminum Utensils, Aluminum Sheets, Aluminum Beverage Cans, Aluminum Automobile parts, and more.

Registration Process for Starting an Aluminum Scrap Recycling Plant

License, permission and registration are needed to start an Aluminum Scrap Recycling business. They are listed below.

• Factory License

• MSME Registration

• NOC by the State Pollution Control Board

• GST Registration

Factory License

It is compulsory for every factory owner to register their premises with local authorities before starting a business. Factory License acts as an approval document provided by authorities to carry out the manufacturing activities. So, before setting up the Aluminum Scrap Recycling Plant, the entrepreneur/applicant must apply for approval of the factory plan and obtain permission for construction.

MSME Registration

MSME stands for Micro, Small, and Medium Enterprises. In a developing country like India, MSME industries are the backbone of the economy. When these industries develop, the economy of the country automatically grows and flourishes. These industries are also known as small-scale industries or SSI’s.

The manufacturing company or any other business platform must be registered under the MSME act. MSME registration is beneficial because it provides a lot of benefits in terms of taxation, setting up the business, credit facilities, loans, etc.

The following is the current revised MSME classification, where the investment and annual turnover are to be considered for deciding an MSME.

MICRO – The investment and annual turnover in the Aluminum Scrap Recycling Plant must be less than Rs.1 crore & Rs.5 crore

SMALL – The investment and annual turnover in the Aluminum Scrap Recycling Plant must be less than Rs.10 crore & Rs.50 crore

MEDIUM - The investment and annual turnover in the Aluminum Scrap Recycling Plant must be less than Rs.50 crore & Rs.250 crore

So, in order to get loans and other benefits, it is very much needed that the Aluminum Scrap Recycling Plant must be registered under the MSME ACT. MSME registration is to be done in the government portal of udyamregistration.gov.in. It is free of cost to register on the government website.

NOC by the State Pollution Control Board

The Pollution Control Board was established to manage and maintain the standards of air pollution and water pollution. It acts as an authority for balancing pollution-related issues. It also issues various directives and policies from time to time regarding pollution and its management.

Getting a NOC Certificate is a mandatory step before starting any recycling plant. The recycling industry must make sure that they are not disturbing the environmental balance. As we are starting an Aluminum Scrap recycling business, we should obtain the NOC Certificate declaring the Aluminum Scrap recycling plant is not polluting the environment.

GST Registration

In the GST Regime, a business whose turnover exceeds Rs.40 lakhs must register for GST and be considered as a taxable person. This process of registration is called GST Registration. For certain businesses, registration under GST is compulsory. If any organization/industry fails to register under GST, it will be an offense and, heavy penalties will apply.

Benefits of Aluminum Scrap Recycling Business

Starting an Aluminum Scrap Recycling business is profitable and sustainable in today’s economy.

• Aluminum is widely used in aircraft construction, building materials, consumer durables (refrigerators, air conditioners and, cooking utensils), electrical conductors, and chemical and food-processing equipment. Currently, the demand for Aluminum is at its peak. Therefore one can think of investing in the Aluminum Scrap recycling business.

• Recycling of Aluminium needs as little as 5% of the energy which is lowest amongst the other recyclable metals.

If you are planning to start a profitable and successful business, Aluminum Scrap Recycling is the right choice in its growing demand.

Will Aluminum Prices go further up in 2021-22 financial year?

In 2021, Aluminum Prices hit record highs and, while I write this Article,  Aluminum is trading at

• Mumbai Aluminum Metal Prices: Rs.230.90/KG

• Mumbai Aluminum Ingot Prices: Rs.234/KG

• Delhi Aluminum Sheet Cutting Prices: Rs.223/KG

And Aluminum Scrap Prices are

• South Indian Aluminum Scrap Prices (No.1 Aluminum Scrap): Rs.102/KG

• Delhi Aluminum Scrap Prices (Aluminum Wire Scrap): Rs.228/KG

• Delhi Aluminum Scrap Prices (Aluminum Utensils Scrap): Rs.194/KG

Aluminum Prices surged to their highest level in 13 years on the 10th of September (Rs.230.95/KG), sparked by supply disruptions after a coup in Guinea - the world’s second-biggest producer of raw material bauxite, a source of Aluminum.

China is the world’s largest producer and consumer of Aluminum metal. So far this year, China has cut more than 2 million tonnes of production capacity of Aluminum due to the regulators-imposed restriction of tight power supplies and pressure to reduce emission. On the other hand, the Output cuts from China also reduced the global supplies and lifted Aluminum prices higher.

Worries over tight supply and growing demand for Aluminum metal in the fields of automobiles and packaging following a swift bounce back in the global economy are expected to support the Aluminum prices. Therefore the Aluminum price is determined to be reasonably increasing in the coming days.

To know Scrap and Metal Prices instantly, Subscribe for RIM Scrap Price Access and Current Aluminum Scrap Prices.

Category : Aluminium

Tags : Aluminum, Aluminum Scrap, Aluminum Scrap Recycling Business in India


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About Jenisha Rajakumar

I'M a Research Analyst and Content Creator at RIM. Currently I'm researching on Copper Prices around the Globe and the impacts on Copper Scrap Prices with regard to COMEX, LME, SHFE and MCX. .... more info

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