Recycling industry boom on drying up of natural resources

Many major companies have started eyeing the metal recycling industry and are waiting for the right time to hit the market seeing huge prospects of the business as natural resources are drying up fast

LONDON (Scrap Monster): Many major companies have started eyeing the metal recycling industry and are waiting for the right time to hit the market seeing huge prospects of the business as natural resources are drying up fast.

According to recent media reports, private equity companys’ interest in scrap metals, which was knocked sharply by the global economic crisis, has picked up with two headline acquisitions by First Reserve and KKR.

In April, First Reserve Corporation squeezed into the tight copper market through its 670 million euro acquisition of Europe-based metal refining and recycling company Metallum.

Just before that, Kohlberg Kravis Roberts & Co (KKR.N) invested about $95.0 million through its KKR Asset Management unit KAM.L in Australian metal recycling group CMA Corp Ltd.

The world's easy-to-grab resources have run out or are fast becoming depleted, and now miners are forced to undertake projects in more remote or difficult to exploit areas.

Also, most countries increasingly are pushing their populations to recycle more. The industry's environmentally-friendly image inevitably is further enhanced by the lower carbon emissions when compared with ore processing.

BCG, which has a long history of working with companies in the mining industry, focuses on steel, copper, aluminium, nickel and titanium. As of 2010, the consultant put the global recycling percentage rate for these metals at 44 percent, 34 percent, 31 percent, 37 percent and 48 percent, respectively.

According to experts carbon steel scrap utilization in China would rise from around 140 kg a tonne of carbon steel to 220 kg a tonne by 2015.

This extra demand would push up steel scrap prices across the globe and presumably recyclers' profit margins, Reuters reported.

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