Green Metal Recycling Demand Expected to Grow

Metals and Mining Review | Monday, December 05, 2022

Smelting scrap metal for recycling requires less energy than processing raw materials into metals, reducing emissions.

FREMONT, CA: As the Environment, Social, and Governance (ESG) attention changes to mining and metals, recycling as a source of green metals is gaining popularity. The circular economy, in which all economy components are repurposed and reused, aligns well with recycling. High commodity prices make the resource-intensive operation of sorting and processing scrap more economically viable. Smelting scrap metal for recycling uses substantially less energy than processing raw minerals into metals, meaning lower emissions, stressing that the aluminum and steel industries alone produce global CO2 emissions.

Geopolitical disputes have shaken global supply networks, highlighting the drawbacks of interdependencies and pushing governments to look inside for commodities, especially scrap. The worldwide demand for scrap metal will continue to be high in the coming years due to the growing need for metals in industries like automotive and construction and ESG factors that favor using recycled materials to minimize carbon emissions. Given the high demand for scrap metal and its relevance for metals manufacturing, numerous countries have sought to retain their local scrap resources for their metals processing sectors by taxing or forbidding scrap metal exports.

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The limits boost the local supply of raw materials and reduce their cost, and some trade authorities believe they unfairly benefit downstream customers. Few countries prohibit scrap metal imports, while many restrict exports. For national security reasons, scrap metals are exempt from US tariffs on steel and aluminum imports. In most nations, smelting scrap metal uses fossil fuels, especially coal or natural gas. Even though it consumes less energy than manufacturing metals from raw materials, consumers are increasingly looking for greener metal products. Even if consumers are ready to pay a premium, identifying and proving the provenance of recycled metals will be impractical and impossible.

While electrification is developing and green energy sources are increasing, most countries' grid power still comes from fossil fuels. Green hydrogen is also scarce. Although green hydrogen is not now widely available, projects designed may consist of it with the assumption that it will become commercially available soon. As customers analyze the provenance of metals in their products, it remains to be seen if the market will discern between the ESG credentials of the scrap utilized in recycling, the paper argues. With the market paying a modest premium on green metals (as certified by existing criteria), it remains to recognize and pay an extra premium for recycled metals with a completely green life cycle. 

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