How to Start a Scrap Metal and Aluminum Supply Business

Scrap Metal

Scrap metal supply is a highly lucrative business venture. It aids the environment, saves on metal production and puts hard cash in your pocket.

The major challenges are transportation, startup capital and earning top dollar for your product. Entrepreneurs interested in scrap metal can leverage on a regular supply of the metal.

Scrap metal is readily available and found in abundance. We find scrap metal in used refrigerators, rims, iron rods and vehicle parts. 

Other advantages are flexible working hours, good income generation and regular demand. The amount of startup capital depends on the size and scope of the business.

With moderate funding you can start a scrap metal supply business.

How to Start a Scrap Metal and Aluminum Supply Business

In some countries you will see scruffy people going through garbage and junk looking for scrap metal or aluminum. This is because the products attract high premium prices usually measured in tons.

To start a small scrap metal company you could create a collection center and buy directly from junk divers. A small scrap enterprise could cost about N500, 000($1000). The good part about the business is its simplicity and easy execution.

Locating the Scrap Yard

Find a suitable location for your collection site. The property you lease should have ample space for storage and sorting.

The property could be located within urban areas and have good transportation network. Find out the state and local government provisions on zoning.

Learn the Trade

You need to understand the type of scrap needed in a recycling plant. Scavenged products such as metal, copper, gold, silver and aluminum are in high demand.  

Develop a keen eye to detect and ascertain the volume off metal in each scrap salvaged. Scrap metal has grades according to purity of the metal. Gain knowledge through apprentice programs, seminars, books and trade workshops.

How Scrap Supply Business is done

The business template is very simple. Buy the scrap from scavengers or the general public.

Salvage only the components you want to sell and weigh them. You set a purchase price based on tons and in turn sell to recycling plants.

Equipment for your Scrap Yard

You need weighing machinery and heavy duty equipment to lift the scrap metal. Separate the different metals into their respective categories and purchase or sell accordingly.

The huge disparity in the purchase price by recycle plants from retailers makes the business very attractive. You also need is a vehicle to transport your scrap.

 Although you could hire a lorry the cost will reduce your profit margin. Purchase a used or fairly new lorry and drive the truck yourself or hire a trustworthy driver.

Other equipment’s you need are wire cutters, grinding wheel, drills, pliers, hammers and cutters.

A list of Equipment for Scrap Yard

Lorry

Weighting equipment

Hammers

Cutters

Buckets

Screwdrivers

Magnet

Hand gloves

Eye goggles

Pliers

Drills

Grinding wheel

Metal Types Found in Scrap Yards

Common metal types found in scrap yards are iron rods, beams, electrical wires and aluminum. Others include vehicle spare parts, bicycles, refrigerators.

You need to keep abreast of changing prices and daily fluctuations. The price of metal is dictated in the international market. Good sources of scrap metal are mechanic workshops and ship yards.

Sorting Scrap

Sorting is very important in the scrap business. Every metal needs proper sorting and placement in an appropriate location.

Anyone who has been to a scarp yard would notice different mounts of metal. Theses are metal that have been sorted according to grade and constituents.

A List of Scrap Metal

Here are a list of scrap metal to purchased based on your interest and business template. There are a number of ferrous and nonferrous metals that qualify. Scrap dealers buy some of the under listed items

Copper wire

Steel chairs

Aluminum sidings

Brass fixtures

Pipes

Iron rods

Alloys

Magnesium

Copper

Automobile engines

Vehicle parts

Refrigerators

Bronze

lead

Stoves

Obsolete machinery

Where to Sell the Scrap

Before collecting the scrape you need to network with scrap recyclers. The big companies are willing to provide transportation and logistic to aid suppliers. To find major dealers use yellow pages, newspaper publications and online resources.

A Recap on Starting a Scrap Supply Business

Before starting your scrap supply business you need to learn the trade. Identify and sort the metal according to their grade.

Learn how to strip or dismantle objects. Follow the changing prices of scrap metal especially those that receive your items.

Purchase a vehicle and lease suitable landed property. Purchase all the equipment you need and don’t forget protective gear.

Register your company as a sole proprietorship business or Limited Liability Company. Get tax identification number and insurance cover.

Find out other permits and licenses you need to operate the business.  Hire employees or work solo the choice is yours to make. Find buyers for your scrap metal and advertise the business through local newspapers.