Soaring copper demand fuelling Africa scrap metal industry

• Global demand for copper is on the rise.
• Coincidentally, Tanzania’s scrap metal industry is also growing. 
• India tightens copper recycling laws.

Demand for recycled copper is growing rapidly as the global focus on sustainability intensifies. According to sector experts, as global sustainability laws are tightened, demand for recycled metals is increasing.

“On the backdrop of tightening sustainablility laws, the metal recycling industry in Africa is emerging as a compelling investment opportunity,” says Pete Oheral, anim investment expert at InvestAfrica.

“Africa’s rich mineral resources, coupled with its growing population and urbanization, create a fertile ground for a thriving metal recycling sector,” he explains.

According to Oheral, the copper recycling industry in Africa is experiencing growth due to increasing demand for recycled materials, particularly in manufacturing and infrastructure development.

In his report, ‘Africa’s demand for recycled metals,’ the expert notes that several factors, including the depletion of high-grade copper resources and a growing emphasis on sustainable practices, are driving this expansion.

The report maintains that the copper recycling industry in Africa is poised for growth, driven by increasing demand, sustainability initiatives, and economic development.

“Addressing the challenges related to infrastructure, regulation, and collection will be vital for realizing the full potential of this sector,” he concludes.

In line with the expert’s views, the Grand View Research institute highlights that; “the Middle East and Africa copper scrap market is projected to grow at a CAGR of 4.6% from 2024 to 2030.”

According to the institute, it is South Africa, in particular, that is expected to see the highest growth rate.

The growth is fuelled by rising demand which in turn is sparked by increased industrialization and infrastructure development; “these factors are boosting demand for copper, both for primary production and recycled materials.”

The institute also cites sustainability as an influencing factor.

“Growing awareness of environmental issues and the need to reduce carbon footprints are encouraging the use of recycled copper,” it explains.

Read also: Tanzania’s CNG revolution: Demand for gas-powered vehicles surges

Copper demand driving Tanzania scrap metal industry

In East Africa, the government of Tanzania  has said it will monitor closely generation and use of scrap metal (and toxic waste) to ensure local industries make most of the waste.

The statement was made by the Minister of State in the Vice-President’s Office (Union and Environment), Mr. George Simbachawene in his address to workers of the Dar es Salaam-based OK Plast during a recent tour of the factory.

The OK Plast plant deals in production of copper cables and mats using materials from used car batteries. The minister cited the OK Plast plant as evidence of “the usefulness of the government ban on wholesale export of scrap metal.”

“I thank OK Plast because you have shown usefulness of the government ban on export of scrap metal…local industries are very important in generating job, producing export goods and this is what is happening here,” he said underlining the fact that the ban on wholesale export of scrap metal is fuelling set up of local plants and that way, creating jobs and earning the government much needed revenue.

“Local industries and controlled exports are earning us foreign currency and adding value to the shilling,” the minister added. He urged other players in the industry to buy copper from local miners rather than importing them.

In his comments,  Mr. Anacleto Pereira, the Control Manager at OK Plast cited insufficient copper supply and that the gap is filled by recycled copper but remains inadequate. Nonetheless, Mr. Pereira thanked the government for imposing the ban which he said has help bridge the supply shortage.

“Before the ban, the materials were being exported indiscriminately while local factories faced serious shortage of the same materials,” he said.

Copper recycling: India tightens law

In a similar development across the world, India has recently issued a quality control order on copper cathodes but critics say the move is likely to reduce domestic availability.

“These costly and unnecessary compliance burdens on foreign suppliers are hurting domestic supply,” media quotes a complain by a sector player that chose to remain anonymous.

Notably, India is the world’s second-largest importer of refined copper. The country recently imposed quality control measures on copper cathode imports requiring all suppliers, foreign and domestic, to ensure quality check of substandard products in the country.

However, the quality control measures have led to a decline in imports, laments the Bombay Metal Exchange (BME), an instruction that deals with metal exchange.

“With domestic licensees unable or unwilling to supply the market and unreliable foreign alternatives, the downstream sector faces real and immediate shortages,” the BME told local press.

Following the new measures, suppliers are now required to get a licence from the Bureau of Indian Standards, which oversees quality control in India, if they are to meet the new quality control rules.

In the development, reports say the new government quality control measures are facing  legal challenges from trade bodies across India including the BME and the Bombay Non-Ferrous Metals Association.

However, the government of India has defended the quality control order against the claims that the measures may and are already leading to supply shortages and that they are designed to create a supply monopoly.

BME maintains that all domestic players use copper cathodes entirely for their own consumption.

“As for foreign licensees, four of ten do not supply copper cathodes at all, they offer only ingots or semi-finished forms,” BME argued before court.

As the government and stakeholders battle it out in court, it is noted that among the ten foreign suppliers who have secured certification under the new rules, seven are from Japan, two from Malaysia, and one from Austria.

“Japan accounts for about two-thirds of India’s refined copper imports, followed by Tanzania and Mozambique,” the government said in a press statement.

However, BME argues that; “there are growing indications the Japanese licensees will withdraw from the Indian market due to costly and unnecessary compliance burdens.”

As demand remains high in places like India, it is expected that local producers in supply countries like Tanzania stand to benefit but with export limiting laws in place, it is the recycle industry that is left to fill the gap.

Copper is one of 30 minerals identified as critical by India in 2023, with domestic demand expected to double by 2030, according to Indian press.