Urban mining, circular economy, green economy, recycling, 3Rs, and many such words are becoming quite fashionable.
There is a lot of mystery, awe and misconceptions around these ideas. Perhaps that is why it sounds so romantic.
But waste management is a serious business. In this article, I intend to rip off the fashionable shroud of mystery around it. I will try to give a clearer insight into urban mining, 7 high-profit areas and an overview of how each one can be leveraged.
So what is urban mining? As the name suggests, it is simply recovering natural resources from urban areas. It is not necessary that it must be something to do with metals. However, since we have a very strong association between mines and metals, more often than not, the term refers to the recovery of metals.
And since there are no mines in urban areas, where do we recover these metals from? Obviously, from all those sources which have some amount of metals and are not wanted anymore by the people. In other words, all sorts of waste.
So urban mining can be simply understood as the recovery of metals from different waste streams.
And what are some of these waste streams? That brings us to the core of this article. I find the following 7 streams as the most important ones in urban mining. There are other streams as well. But these 7 are perhaps the most promising and profitable.
1. Municipal Solid Waste
This is the biggest in volume. As per global averages, a person generates about 740 grams of municipal solid waste every day. (This can be verified from many authentic sources such as World Bank, UNDP, etc.) From an Indian perspective that average is almost half. But given the population of India, the total volume becomes approximately 45 Lakh Tons of municipal solid waste every day! That is an unimaginable volume!
Municipal solid waste typically contains dry and wet waste. Even if we consider only the wet waste to be about 30% by weight, we are talking about 15 Lakh ton (1.5 million tons) per day. The approximate biogas generation per ton is about 500 cubic metres i.e 750 million cubic metres (75 crore cubic metres)
Each cubic metre of biogas can generate about 2 kWh of electrical energy. I leave the rest of the math to you.
On average, municipal solid waste contains about 10% metals (by weight). That makes it 450,000 Tons of metals every day. Can you imagine that we are collectively destroying this much metal every day? Of course, in a country like India, this proportion could be halved. And also, we have an army of ragpickers who pick out many of these metals before disposing of them in a landfill. So even if we say that just about 1 % of metal content in our MSW is being wasted every day, we are still talking of a few thousand tons. And on a daily basis.
Now just imagine, if you were to set up a recycling facility for just one metal, say aluminium. And assume that you are able to process just about 0.001% of MSW.
Can you imagine the annual turnover of your venture?
As per the respected statistical studies company Researchgate, of all the metal scrap in MSW, 24% is aluminium. And the current market price of recycled aluminium is about 110 Rs per kg.
Go, do the math!!
(It should be more than 40 Crores annually)
2. Waste Tyres
Metal Recycling Association of India says that every year 1.5 million tyres are scrapped and only about 450,000 are recycled. Can you see the potential for growth?
Approximate steel content in tyres is about 15% by weight. So if we consider the average weight of scrapped tyres per year, we are talking about 2250 tons of steel recovery potential every year.
And this number will only go up. Because in India vehicle use is increasing due to various factors including a rise in per capita income and a rapidly widening road network.
And steel is not the only thing that you get from recycling tyres. There is about an equal amount of natural rubber that can be recovered. Rubber crumbs sell for anywhere between 25 to 50 Rs per Kg depending on the quality.
You can even thing of forward engineering and production of items such as turfs, tiles, etc.
Currently, most formal tyre recycling facilities are ill-equipped and most are focused on pyrolysis which may not be the best method for recycling all types of tyres. Depending on the quality of the tyre, one needs to choose between pyrolysis, crumbing and retreading.
And yet, most formal tyre recyclers use this method simply because of the unavailability of technology, lack of awareness and imagination.
At Respose, we have now made the technology part easily available. Creating awareness and firing imaginative entrepreneurship is what is now needed. And that in itself is a potential business as well!
3. Automobile Scrap
With the automobile scrapping policy taking shape as I write this article, this is one big scrap stream. In the recent Central Government Budget, a lot was said about scrapping older automobiles. This announcement should provide a big impetus to automobile recycling.
Vehicles are a big block of metals, plastics and rubber on wheels!
Not enough data is available on metal composition. But my best guess is that every 4 wheeler passenger vehicle should have about 600 Kg of metals on average. Add to it larger vehicles such as buses, trucks, earth moving equipment etc. It is clearly a potential for a few thousand tons of metal every year.
Apart from metals, automobiles also have a big portion of plastic, leather, rubber, and electronics.
As of now, there is no formal automobile recycling facility in India. Most automotive scrapping is done in the informal sector. These are highly efficient in their processes but extremely poor on the environmental front.
With the vehicle scrapping policy coming in and a sustainable framework for recycling of end of life vehicles being drafted as well, this is a sector that has the potential to grow into a mainstream industry. If you are an ambitious entrepreneur willing to put in the hard work, this is a sector that you cannot ignore.
4. Construction and Demolition Waste
As per the Centre for Science and Environment, India recycles just 1% of its C&D Waste! The official recycling capacity is only about 6500 tons per day.
The official estimated generation of C&D Waste in India is 150 million tons per annum. The unofficial number is at least 3 times that. Some say it is 5 times. In that case, the potential headroom for growth of this industry is almost infinite.
C&D waste has generally steel and aluminium among other metals. Besides, it has many other components such as bricks, concrete, gypsum, wood etc. From C&D Waste, almost 90% is recyclable.
Unfortunately, this segment is not studied in detail, at least in India and hence no domestic statistical numbers are available. However, based on some global studies, it is clear that it is a profitable activity.
At the same time, also keep in mind that much of the revenue will also come from tipping fees rather than purely from sale of recovered metal.
So this business is slightly different from the rest of the urban mining businesses. You get paid for the service of cleaning up. Of course, you also earn from the recovered material. But essentially it may perhaps be more advisable to set it up like a service model.
5. Electronic waste
Electronic waste is generally hyped up by mentioning the gold and other precious metal content in it. However, there is a lot more to it than the Gold.
From a market potential perspective, as of 2020 India generated about 2 million tons of e-waste annually. (The unofficial estimate says it is likely to be around 3.5 million tons). Of this, just about 200,000 tons is actually recycled officially. That is just about 10%. Even in this 200,000 tons, much of it is just on paper.
The entire country has an actual installed capacity of just about 200,000 tons. (Actual installed capacity is not the same as the licensed capacity which is much larger) By saying that we recycled as much, we are claiming that all our recyclers are working at full installed capacity. Whereas, the reality is otherwise. The rest of the e-waste is either waiting to be recycled or handled by the informal sector.
This makes the electronic waste recycling sector very lucrative because of regulatory compulsions, growing awareness among people and policies of manufacturers. The country needs at least about 2000 more recycling plants.
From a realistic profitability perspective, even if one focuses only on copper as the recovery objective, it is a great business to be in. On average e-waste has about 16-20% of copper. So 2 million tons of e-waste generation annually means a potential to recover about 320,000 tons of copper. At the current price of Rs 350/- per kg for scrap copper, the value comes to about 11,200 crores INR!
Besides Copper, electronic waste has significant amounts of Aluminium and ferrous metals. Precious metals such as Gold, Silver and Palladium are also present but are extremely difficult and expensive to recover. A small recycler cannot recover these precious metals efficiently. Also, everything in e-waste does not contain precious metals. So do not imagine a business model around precious metals unless you are willing to invest at least about 60-70 Crores in the business.
On the other hand, if you are focused on copper, you can set up a decently sized facility within as low as 2 Cr or a little lower.
Batteries have been around for some time and recycling them has also been existing. But most of it, rather all of it has been based on lead-acid batteries. With the proliferation of electronic devices, Li-ion, Ni-Cd, Ni-MH etc types of batteries are also becoming a major portion.
Batteries are segregated by chemistry.
As per Markets and Markets, the global battery recycling market including all types is worth about USD 17 Billion.
As per JMK Research, India has the potential of touching about USD 1 Billion (approx 7500 crores) in the recycling of Li-ion batteries (LIBs) by 2030. Li-Ion batteries are currently only about 20% or lesser as compared to lead-acid batteries. However, by 2030, this equation will significantly change due to the onslaught of electric vehicles.
To give an indication, current battery usage is about 0.5 GWh and it is projected to be around 80 GWh by 2030.
The rate of growth and the headroom is immense.
Technologies are available. It is a matter of someone getting serious about it and doing actual work on the ground. (Tata Chemicals has already started a pilot plant and plan to scale it to about 500 tons per annum capacity)
7. Metal Scrap
Global Metal scrap industry is worth USD 500 billion. India has a mere 2.2 % share in this industry. While India hosts almost 17% of world population, this market share in one of the most common industries is minuscule.
The potential to rise as the metal recycling hub of the world is huge. Considering the labour arbitrage, land availability and posts infrastructure, India is one of the best countries to leverage on this opportunity.
The most popular metals among scrap import are Aluminum, Copper, Steel (just listed alphabetically). Among these, even if we consider just Steel, India is the world’s 2nd largest producer. Now consider this. Within our entire steel production, less than 10% uses scrap steel. More than 90% uses iron ore as the source.
Consider three facts: One, using scrap steel is at least 3 times more beneficial than ore. Two, there is 90% headroom for growth. And three, we are among the largest producers in the world. These 3 points highlight the industry potential like nothing else.
Urban mining, in a nutshell, is the next big thing. For India, it has the potential of being bigger than her IT industry. The opportunity exists, the time is ripe, technology exists, investors are hungry for new real ventures and success stories are available.
The question is are you willing to script a success story of your own?
We exist to help you…. Enabling and Empowering Recyclers.