This year has gone down as one of the toughest years in many for the global nonferrous scrap industry and the recycling industry overall. With new initiatives getting launched in every corner of the world to reduce waste and increase material recycling for the manufacture of new products, one would think there would be less ending up in our landfills. Unfortunately, that simply has not been the case.
Operation Goddess of the Earth is a three-phased initiative started by the Chinese government in April 2009. One of the policies enacted since then has been to reduce the country's foreign scrap intake - to help protect its environment and to focus more on recycling local scrap. The latest phase of this initiative, dubbed Blue Sky 2018, continues to enforce significant limitations on the type of scrap accepted at Chinese borders, and on recovery percentages, to ensure that China is only importing premium grades of the world's scrap.
These policies mean there is virtually no tolerance for contaminated material shipped from foreign markets, and there are vigorous scrap inspections at the point of origin. This kind of policy costs buyers and sellers of scrap precious time, money, and poses numerous administrative challenges.
Until a few years ago, many countries were counting on China to take as much as 70 percent of their scrap, some of which consisted of lower grade nonferrous metals. Yard infrastructures and other facilities that would generate nonferrous and other scrap were geared towards pushing this kind of material out of their system towards foreign markets such as China where not only the processing cost was lower, but where environmental restrictions were also not as rigorous. This was true especially for more developed countries where labour and ground logistics are so expensive that it was much cheaper to load all materials into a container and ship it to the other side of the globe, rather than moving it to another province or state where often an hour's wage would be equal to a whole day's wage in another country.
However, significant changes, both expected and unexpected, have started affecting the scrap industry since 2016, and it has become more and more apparent that our current global market situation for scrap materials is not just another passing phase. Since the Chinese government started implementing their restricted scrap import policies, businesses now know they will not be experiencing the same global market environment again in the foreseeable future.