LONDON A new wave of investment, focused on the Middle East and Asia, is being seen in the global scrap sector, one scrap player in the Middle East said.
Until the economic crisis took hold in 2007-08, investments in the global scrap industry had been rife, Salman Shaban, commercial manager of Dubai-based metals recycler Lucky Group, told AMM sister publication Metal Bulletin.
"Pre-2009, many ventured into (scrap) as a side business as it was easy money," he said.
However, since then a lot of investors have moved away from the scrap industry. This, he said, was largely the result of difficulties in obtaining credit or loans since the crisis.
Many trading companies, processing yards and secondary aluminum plants have been shut down since 2009, but things are starting to improve, Shaban said.
"It seems that things are changing now, and a new crowd of investors and start-ups are taking shape in the scrap metal industry again," he said.
"This time, we are seeing more genuine long-term investments, such as primary/secondary production plants, state-of-the-art processing facilities and waste treatment centers," according to Shaban.
These investments are mainly taking place in Southeast Asia, East Asia and the Middle East.
"This region thrives from the oil and gas economy, a construction boom and large populations," Shaban said.
The Arab Spring of 2011 is another factor that drove investment in the scrap industries in countries not affected by these protests, he noted.
Collections of scrap in Tunisia, Libya, Egypt and Syria were seriously hindered by the protests, Shaban said, adding that this drove investment away from the affected countries and toward other countries in the region.
"Some of the negative factors have been short term, and this has given a boost to certain Middle Eastern countries," Shaban said.
"The main beneficiaries from the Arab Spring were countries like Saudi Arabia, and the (United Arab Emirates), which apparently received big boosts in investment from the wealthy who chose to relocate their wealth away from disputed countries," he said. "It seems that some of the wealth ended up in joint ventures, investments and start-ups in the scrap metal industry."
A version of this article was first published in AMM sister publication Metal Bulletin.