Mainland must use more scrap metal

PUBLISHED : Thursday, 22 February, 2007, 12:00am
UPDATED : Thursday, 22 February, 2007, 12:00am

Raw materials for steel production dwindling as prices surge

Demand for scrap metal to supply China's fast-growing steel industry will increase amid rising metal prices and as the country seeks to preserve mining and energy resources and reduce pollution, industry observers said.

'There is a shortage of base metals or virgin ores, which will drive aggressive demand for scrap,' said Stephen Greer, chief executive of Smorgon Hartwell Recycling, the regional scrap recycling unit of Australia's Smorgon Steel Group.

Mr Greer said China, the world's largest steel producer, was the world's largest scrap consumer and was fast becoming the largest domestic market for generating and recycling scrap.

'This has surprised many people and we have seen soft import demand for scrap metals from time to time during a period of strong economic growth,' he said.

China is expected to produce more than 400 million tonnes of crude steel per year between last year and 2010, requiring more than 700 million tonnes of iron ore and more than 75 million tonnes of scrap per year, according to the National Development and Reform Commission, the country's top economic planner.

The country's scrap steel demand would rise 5.4 per cent to 80 million tonnes this year, from 75.9 million tonnes last year, China Association of Metal Scrap Utilisation secretary-general Yan Qiping predicted.

It was important to increase the use of scrap as mining resources would eventually be exhausted and China's utilisation rate of scrap steel was very low, Mr Yan said. About 18 per cent of the nation's steel came from recycled scrap metal last year, compared with 40 to 50 per cent in developed countries.

The NDRC said in a blueprint for China's steel development policy published in July 2005 and covering the next 15 years that it would step up efforts to increase the use of scrap steel and decrease the proportion of iron ore use to ensure the sector's sustainable development.

The mainland's iron-ore mine resources amounted to 21.97 billion tonnes at the end of 2004 while exploitative reserves came to only 11.8 billion tonnes, according to the China Steel Association.

Based on existing exploitation technology and exploitation spread, at more than 600 million tonnes per year, the country's iron-ore resources were enough for only the next 20 to 40 years, assuming no new resources were found, it said.

'Scrap steel resources are unlimited because of its recyclability,' Mr Yan said. The metal could be recycled every eight to 30 years, each time getting a 'new life'.

Recycled stainless steel contains valuable raw elements including chromium, nickel and molybdenum that are gathered, processed and reused in the production process. The more scrap used in furnaces by mills, the less new raw material is required in production.

Gu Zhanggen, vice-chairman of Maanshan Iron & Steel, said about 10 per cent of the company's products came from scrap. With the company increasing capacity, demand for scrap would increase steadily, he said, although the proportion of scrap versus iron ore would not change significantly.

Using scrap in steel production has environmental benefits, saving 60 per cent of energy and 40 per cent of water compared with making steel from iron ore. Its use can lead to reductions in steel production emission of exhaust gasses, waste water and waste residues by between 76 and 97 per cent.