The scrap-metal industry …a multi-billion-dollar business left for the average Joe

It is worth some US$300billion in the United States and contributes about US$40billion annually to the North American country’s GDP.

It employs an estimated 36,000 people working in over 1,450 companies and is projected to contribute about US$406 billion by 2020 to the US economy. Yes, the scrap-metal industry is big in the US and other advanced economies.

The UK, for instance, boast about £6billion annual revenue generated from scrap-metal alone. It also supports over 10,000 workers in the economy, all indicating the value and size of the scrap-metal industry globally.

But the case in Ghana is very different. There are hardly any statistics to assess the value and size of this ‘gold mine’, even though the industry is active in the country.

In view of the lack of information on the industry, the B&FT embarked on a fact-finding mission to assess the value of this industry and see whether it is better leaving it for the ‘average Joe’ – the ordinary people – to treat it as a hand to mouth business or if government should take an interest and develop it into a large industry as it has done with major commodities such as gold and bauxite.

On Friday October 5, 2018, B&FT’s Obed and Dziedzom visited Agbogbloshie – a suburb of Accra that has become the ‘head-quarters’ for all kinds of scrap.

Most of the scrap businesses are sited beside the railway lines along the banks of the Odaw River, which is cluttered with makeshift structures serving as homes for people. The area is surrounded by filth, and a pungent smell welcomes anyone who sets foot there.

Right there is Yakubu Andani, owner of Andani Barrier; a man who has been in the scrap-metal business for the past 25 years. He deals largely in iron, copper, aluminum and brass scrap.

He has 26 employees, owns about 90 load-carriers commonly called ‘troks’, and five (5) tricycles. In his yard are his workers, who are assigned different roles.  Some of them collect scrap with the troks and deposits it at the yard. Others are dismantlers; and some load the goods into trucks for delivery.

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The whole process of getting the final goods onto the trucks and delivered to clients involves four main steps.

First, is collecting the scrap-metal and depositing it in the scrap-yard. Then to the dismantling phase, wherein the metal is separated from plastic and other non-metal substances.

The metal is then sorted into copper, aluminum, brass and iron. This process can include burning if the metal being looked for is copper.

The next step is weighing, which determines the price of the metal based on its weight. Finally, it is delivered in trucks to the client.

To a layman, the scrap is mere waste; but according to Mr. Andani, a tonne of scrap-iron is currently sold at GH₵1,100 – a price he says is much lower than the expected GH₵1,500.

In a week, Mr. Andani added, he loads between 25 and 30 tonnes, which makes one trip. Translating into figures, Mr. Andani currently rakes in a weekly revenue of not less than GH₵27,500 from iron scrap alone.

With copper, which is the most expensive yet hard to find scrap, Mr. Andani said on a very good day he gets more than 1000 pounds of copper. Each pound is sold at GH₵10 – meaning he could make more than GH₵10,000 in a day if the copper becomes available.

So, if an individual can make this amount selling on a small scale, then it can be safely concluded that the scrap industry is an untapped gold mine in the country.

This confirms an earlier study by Andrews Nkansah in 2015. He conducted a research in Sunyani, Brong Ahafo Region, which revealed that the total revenue from scrap metal in that city alone then amounted to GH₵141,584.

From these analyses, it is clear that the country’s economy is losing so much by not fully developing this industry into a large one that could employ thousands of people in the country – as is happening in other countries.

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Effective government policy needed to drive the industry

In April 2013, government outrightly banned the exportation of scrap-metal – saying it wanted local steel industries to get access to raw materials. However, our findings show that most of the steel industries in Ghana import their raw materials.

To this effect, an industry player – Katey Cabutey Adodoadji, CEO-Steelcore Technologies – is of the opinion that it is not a solution to ban scrap exports if the industry is to grow into a large one. He argues the steel industry, in general, needs a deliberate policy to guide and direct it if the nation wants to really gain from it; adding that without it, the scrap industry cannot thrive.

“We don’t have a national steel policy that would serve as a regulatory framework for the industry. It is sad that as Ghana seeks to industrialise, it doesn’t have a very vibrant steel industry to support it. So, it is not enough to ban exports of scrap metal. There must be a policy that directs where we want the steel industry to go,” he told the B&FT in an interview.

India, for example, set a National Steel policy in May 2017 to enhance domestic steel consumption and ensure high quality steel production, and create a technologically advanced and globally competitive steel industry.

Since its implementation steel production capacity has increased, and the country has set a target of producing much more steel by 2020.

It is on the back of policy-successes like this that Mr. Adodoadji is calling for a comprehensive national policy on the steel industry, which he believes will grow the scrap industry if it is implemented.

From our observations the scrap metal industry has a long value chain, which if the needed attention is given to it – especially considering the quantity of metal waste that is swallowing the country – will create more jobs and improve livelihoods for many, thereby benefitting the economy at large.

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