India Needs To Develop A Strong Industrial Base For Recycling Aluminium
India’s Aluminium production at about 3.7 MMT makes it the 3rd largest producer of the metal. With consumption at 2 MMT amounting to about 2.5kg per capita against the global average of 11kg per capita, India has tremendous headroom for growth in this sector. As India moves to achieve the global average of 11 kg per capita, an additional annual consumption of 16 MMT is forecast. If this were to come from the primary route the socio-environmental load could be catastrophic. Hence, India now needs to develop a strong industrial base for recycling Aluminium scrap and promote secondary producers.
During the Prime Minister’s plenary address at the World Governance Summit in 2018, he stated, “We need to follow the six ‘R’s that stand for reduce, reuse, recycle, recover, redesign and re-manufacture. This will lead us to a point where we can rejoice,” Recycled Aluminium meets every criterion of the 6R circular economy. Infinitely recyclable, Aluminium scrap should not be treated as waste, but as high-quality raw material.
India’s Aluminium production at about 3.7 MMT makes it the 3rd largest producer of the metal. With consumption at 2 MMT amounting to about 2.5kg per capita against the global average of 11kg per capita, India has tremendous headroom for growth in this sector. As NITI Aayog states: “Going forward the [Aluminium] sector will be a key contributor to the government’s key flagship programs like Make in India, National Capital Goods Policy, Development of 100 smart cities and government’s commitment to reach a 100 GW solar capacity by 2022 from 20 GW today.” However, consumption of Aluminium must be sustainable, and environmentally and socially responsible.
Aluminium does not exist in a free state in nature. Its production begins with mining of bauxite ore. It takes approximately 5-6 tonnes of bauxite ore to produce 2 tonnes of alumina. In turn, it takes approximately 2 tonnes of alumina to produce 1 tonne of aluminium. Depending upon quality of the ore and the processing conditions employed, typically about 4–5 tonnes of hazardous Red Mud waste is discarded per 1 tonne of aluminium metal produced. All in all about 8-10 MT of solid waste and more than 3000 KT of CO2 is generated for every 1 MT production of Primary Aluminium. This production process accounts for about 65-67% of global production. In India, primary production accounts for about 70% of total Aluminium production.
Due to its significant adversarial impact on the Sustainable Development Goals, Aluminium production through the primary route is being increasingly substituted with secondary production which utilities Aluminium scrap as its feedstock.
It has been estimated that converting 1 MT of Aluminium scrap into Aluminium products results in saving of several tonnes of bauxite, 14,000 kWh of energy, 6,300 litres of fossil fuels, 7.6 cubic meters of landfill and valuable land for other uses such as forests, housing, industry etc. This process accounts for about 33-35% of global production and is justifiably increasing.
The generation of Aluminium scrap is majorly linked to personal and industrial consumption of Aluminium products apart from some fractions coming from ‘new scrap’ arising out of machining etc. Scrap is generated through shredding, cutting, shearing of end of life products on the one hand and from machining and fabrication operations on new metal. Since aluminium has multifarious applications the scrap that is generated from this vast variety of products is mixed and heterogeneous in nature.
Prime Minister announced at the COP 26 summit that India is committed to be a NET ZERO emission country by 2070. The Aluminium sector has a key role in realising these aspirations.
India, in 2020, with imports of about 1.3 MMT of Aluminium scrap became the largest importer of Aluminium scrap with a share of 14.1% of the global trade. About 24% of the scrap is sourced from the United States whilst about 10% each is sourced from Saudi Arabia and UAE.
As India moves to achieve the global average of 11 kg per capita, an additional annual consumption of 16 MMT is forecast. If this were to come from the primary route the socio-environmental load could be catastrophic. Hence, India now needs to develop a strong industrial base for recycling Aluminium scrap and promote secondary producers. This mandates that the raw material supply chain of Aluminium scrap is robust and reliable for the industry to be sustainable.
China has already learnt this lesson and put in place an evolved mechanism to meet its Aluminium requirements. China was the largest importer of Aluminium scrap for many decades.
As its economy has grown, China’s Aluminium scrap requirement is entirely met from domestic sources. As per reports “During the “13th Five-Year Plan” period, China’s secondary aluminium output totaled about 34.8MMT, reducing the extraction of aluminium ore by 139.2MMT, conserving the utilisation of standard coal and water by 120MMT and 770 million cubic metre, respectively, and reducing the discharges of carbon dioxide and solid waste by 380 MMT and 696 MMT, respectively.”
For India, there are two major challenges for the industry. Firstly, the potential imposition of Import duties on Scrap and secondly in the proposal to make unique ‘India specific’ standards for Aluminium scrap.
The World over, countries have allowed movement of metal scrap without imposing any duty barriers, but India imposes an import duty of 2.5% on scrap for this ‘green’ industry. This policy does not align with the Prime Minister’s vision for a circular economy.
Media reports suggest that the primary producers have urged the Government to further hike the duty to 12% citing loss of business. About 70% of secondary Aluminum production caters to the Automotive industry and the balance offtake gets consumed in Building & construction, Utensils & Packaging, white goods etc. Any duty hikes on scrap imports would have a cascading effect on several sectors. Fortunately, the Finance Minister in her budget speech has not raised duties on Aluminum scrap and has also maintained NIL duty on steel scrap.
That the secondary sector is un-organised and imports poor quality scrap is an incorrect apprehension. Secondary producer plants and facility require appropriate licences for procurement of raw materials, processing it and selling it in a competitive market. Furthermore, quality of scrap is as important to the secondary producer as the input costs, quality of their final product, and ultimately their profits are dependent on good quality scrap.
Post processing of scrap the end products such as ingots, coils, plates, extrusions etc. whether produced through the primary or secondary route are subject to the same BIS specifications and standards. By-products are subject to the controls of the Pollution Control Board before being disposed of in accordance with the relevant rules and notifications on the subject. Therefore, there are adequate checks and balances for this industry already in place.
India needs to incentivise ‘going green’ across the entire scrap value chains, introduce minimal regulatory burdens on recyclers, align with international specifications and classification norms for trade in Aluminium scrap to meet our COP 26 declarations. Optimal utilisation of secondary aluminium will promote Swatch and Atmanirbhar Bharat.
During the Budget speech, Finance Minister announced that 400 new Vande Bharat trains will be introduced to the Railways. It would be an emphatic statement if the entire 400 Vande Matram Trains are made from recycled products. This will demonstrate to the world that India is serious about its pledge made at the COP 26.
However, imposing impractical and unreasonable regulatory and compliance restrictions on the scrap supply chain would result in nothing short of the collapse of the current, green recycling infrastructure that relies on unhampered access to scrap.