Taking risks for scrap metal

By Shilpa Kannan BBC India Business Report

In 2004, 10 workers were killed in a steel factory outside Delhi when the scrap metal they were melting down in the furnace caused a blast.

The price of scrap metal has doubled in less than a year

The consignment was later thought to have included war scrap from Iran.

This led to the government considering a complete ban on the use of scrap metals from war zones in this trade, but four years on, the law is yet to be implemented.

In June this year, two boys were injured in an industrial estate in Tamil Nadu when they were handling old cartridges while looking for metal in a scrap pile.

The authorities seized the bags of ammunition and an investigation has been ordered.

But for those involved in the trade, the health risks continue to be more than ever before.

Metals prices

The scrap prices for iron and steel have doubled in less than a year, as rising world metals prices stoke demand for scrap.

That is proving to be big business for Indian companies who specialise in melting down everything from used cars to unused missiles.

A lot of that trade happens in an old industrial estate in Western Delhi called Mayapuri.

There is a lot of money to be made but it's risky business Pawan Kumar

Small traders have set up shop along dirt roads and most of the shops overflow with metal waste: bits of old refrigerators, mangled iron from demolished buildings, machinery components, tractors, even children's bicycles and car doors find a place here.

As a group of men saw through a car, the engine falls out onto a puddle in the middle of the road.

They then haggle loudly to bring down the price for the various parts of the car that has just been taken apart. One picks up the headlights, another carries away the seats while the third bags the engine.

Within minutes, nothing of the old car remains. Everything has a price and use in this market.

Separating scrap

The easiest metals to recover are iron and steel and these account for the bulk of the trade at Mayapuri.

Pawan Kumar's family has been in the business for generations. Buying scrap metal from traders who import it from foreign countries, he gets it weighed and sorted to sell to bigger dealers and foundries.

Sitting on a platform of old car doors piled on top of each other, he keeps a watchful eye on his workers as they clear the dirt and waste from bags of metal that have just been brought in.

They are hunting for anything that can be re-sold. One man uses his bare hands to pull cables apart and to break bits of plastic off automobile parts. Another uses a hammer to break bigger metal rods.

When the metal comes in it is a mixture of the pure metal and impurities such as bits of demolished buildings that have not been separated from the metal.

'Risky business'

Segregating it brings in more money as the foundries they sell to can put it directly into furnaces to melt it down.

"I have been doing this for over 15 years and it's a highly volatile market," Mr Kumar says.

"I buy a lot in one price and by the time it's segregated and ready to be resold the prices have gone up again."

"Steel prices keep going up. There is a lot of money to be made but it's risky business."

At the Star Wire factory in Faridabad outside Delhi, scrap metal is being melted to make stainless steel.

As the bags of scrap go into the furnace, the high temperature melts them down and fuses them into a bubbling liquid.

The furnace is then tilted to pour it into huge vats to cool, after which it is poured into moulds to make identical ingots of clean metal.

War zones

Nearly 4,500 such foundries operate in India, melting down waste to feed the ever-increasing demand for metal.

A substantial amount of the scrap comes from war zones such as Iraq and Afghanistan.

Some say more care needs to be taken with the source of the scrap

War scrap is cheaper because most developed countries have banned imports from war zones while others have stringent rules for import.

"It's important that we get this scrap. I know it's from war zones but as an industry we are mature enough to self-regulate," says S K Goel, director of Star Wire India.

"Whether it's from Afghanistan or Iraq, we can get it checked while loading at the port of origin."

"There is so much demand for metal in India that we simply cannot do without this constant source of scrap."

Compulsory inspections

Booming construction across the country is one of the factors driving the scrap industry in India.

Using scrap metal brings the costs down, but this is pushing the price of recycled metal higher and higher, leading to fears that the existing regulations may not be enough to monitor just what kind of scrap is coming into the country.

Currently, Indian government rules state that any non-shredded scrap metal imported from a war zone has to have a pre-shipment certificate of inspection.

But critics say that these regulations can easily be flouted by unscrupulous traders who ship the consignments to other countries and then re-ship them to India.

This changes the port of origin and the consignment is not checked as thoroughly as it should be.

Dumping ground

Rakesh Johri, an environmentalist who specialises in Waste Management at The Energy Research Institute in Delhi says India is becoming a dumping ground for hazardous waste and is demanding action to prevent it.

"Without stringent import rules there is a danger that live ammunition and even nuclear material would be shipped in with the scrap metal."

"The industry has to be careful. When you melt metal scrap that has been in hazardous environments, it could release toxic gases. Independent organisations should be inspecting the shipments."

"The government should start by tightening the rules, then eventually they should completely ban scrap from war zones."

Even he agrees that India's rapidly growing economy needs this metal to build rail networks, flyovers and skyscrapers.

But this voracious appetite for metal may be at the expense of its workers.

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