How to Start a Scrap Business in UAE
Out of the many things that UAE secures a top-ten spot in the world, the export of ferrous scrap metals is one of them. The UAE has eclectic sources of producing tons of recyclable scrap metals: automobile, household goods, manufacturing industries, etc.
BMRA, the British Metal Recycling Association, has it that nearly 400 million tons of scrap metal are produced annually. One must also note that scrap metals contribute to a major chunk of landfill waste pollution. In efforts to minimize that, corporations around the world are consciously acting to reduce landfill waste pollution. Hence, this adds credence to the profitability of the business.
So, if you’ve decided to enter this lucrative business, there are three aspects that are absolutely vital: the holding area for the scrap metal, the amount of scrap metal, and the safety measures taken to prevent mishaps. Also important is the type of customer base you maintain and their reputation in the market.
Cost of Setting up a Scrap Metal Facility
A businessperson looking to setup business in Dubai has ample of opportunities. If vying to get to the top in the scrap industry business, they have a lot of options. They can specialize in scrap metal trading and buy warehouses to sell recycled metals. One could also focus on a single type of scrap metal and deal with its recycling.
You must also note that the scrap metal market is subject to constant fluctuation because metals are used in making everyday commodities. However, this shouldn’t deter you from setting up a scrap metal facility in UAE as this business is capital-intensive. The initial investment will cost you in the range of a few thousand dollars to hundreds of thousands of dollars.
If you put your technical expertise to good use, this business will prove to be highly lucrative. It depends less on recycling the type of metal — like lead, gold, silver, copper, or tin — and more on your understanding of the business.
Steps to Start a Scrap Metal Business in Dubai
- Diligent Market Analysis
Begin by understanding your place in the scrap metal business. Have you constructed a strategy to process the scrap at your facility? Do you have a large local network to collect scrap metals? Do you want to import the scrap metals and sell them locally? For every type of scrap metal business within the whole business, there are correspondingly different procedures to follow, which is why, it is prudent to consult a business setup consultant to get acquainted with the procedure.
But let us consider the most prominent type of scrap metal trading in the UAE. Assume that your company deals with buying scrap metals like aluminium, tin, copper, and an assortment of other metals that are found in construction sites and waste-collection centres. If this is the kind of workflow you’re trying to stream into, you must know that the next step involves cleaning and segregating the scrap before exporting it to a neighboring country, where a majority of UAE’s scrap metal ends up. However, there’s more to this process, as one has to read between the lines to understand it comprehensively; through thorough market analysis.
- Finding the Right Place for the Facility
The total cost involved in establishing your metal scrap unit is contingent on a variety of factors. If it is leasing a warehouse or a yard you’re going after, then the annual rent figure is the most relevant information for you. Add to that equipment like forklifts, shipping containers, solid waste management costs, metal sorting bins, etc, and you will get the total approximate cost. There would also be contingent factors to consider, such as mishaps and untoward incidents, so it’s best to also invest in safety equipment like smoke alarms and fire sprinklers.
- Procure the License
If you decide to establish your scrap metal business within a free zone — like a majority of businesspersons carrying out new business setup in Dubai — then the number of companies you could trade with will be limited.
Remember that you will also have to comply with the local rules and regulations pertaining to the environment and capital. One of the biggest advantages of setting up a business in one of the many free zones in the UAE is that you can setup your business relatively quickly. The license can be acquired from the Department of Economic Development (DED), but a local sponsor will be required. But that should pose no problem to you as Cross Link International will provide you with the local sponsor.
- Start your Business Activity
Once you finalize your business structure, buy the land for the manufacturing unit, and acquire the license, you can commence your business activity. With meticulous efforts, your metal scrap trading business will gain quick traction in the neighbouring countries. With the south Asian economy on the rise, there remain a plentiful of options for you to capitalize on. Not only will you get good returns in this business, but will also be contributing to making the planet sustainable for generations to come.
Benefits of Starting a Scrap Metal Business in Dubai
- Energy Conservation
According to the US Environmental Protection Agency, a single recycled aluminium product can save enough energy to power a 60W bulb for more than 5 hours. And you’d be dealing with thousands of aluminium products. Think of all the energy you could save.
When comparing the energy required for scrap metals over new ores, we get the following figures:
- 90% for Copper
- 92% for Aluminum
- 56% for Steel
- Economic Benefits
According to one report by National Recycling Coalition, recycling metal creates 36 times more jobs than dumping the same volume of metal into an incinerator and 6 times more jobs than transporting it to a landfill. The same report also states that the recycling industry racks up an excess of $236 billion annually and hires more than a million people.
- Environmental Welfare
Recycling metals helps conserve natural resources by diminishing the emission of greenhouse gases and consuming lesser energy. The production of metals from ores produces higher amounts of greenhouse gases as opposed to the recycling of scrap metals. According to the Institute of Scrap Recycling Industries (ISRI), scrap metal recycling may reduce the emission of greenhouse gases by 300 million tons to 500 million tons.
Get Started Here
If you are dreaming of starting your own company and carrying it forward with a team of employees under your wing, then consider that dream accomplished. We, Cross Link International, will start your company for you, so you don’t have to! Carry out your new business setup in Dubai with us and realize your dreams!
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