Climate-driven surge in scrap use could slash primary metal demand - Woodmac

FILE PHOTO: Workers transport scrap metal on an electric tricycle during evening rush hour following an outbreak of the coronavirus disease (COVID-19) in Beijing, China, August 13, 2020. REUTERS/Thomas Peter

(Reuters) - A surge in the use of scrap metal due to strict environmental policies could slash global demand for primary aluminium by almost half and cut demand for primary copper and iron by more than a third by 2040, Wood Mackenzie said on Thursday.

In a report on the future of mining, the consultancy said there is a “strong economic rationale” for greater scrap processing and use, with investment costs for aluminium scrap plants typically one-tenth those of smelters.

The carbon footprint of secondary aluminium production is up to 25 times lower than that of primary, while steel emissions could halve with increased scrap use, the report adds.

Current scrap collection rates globally are hard to estimate but about 56% of end-of-life goods end up in scrap-recycling systems, said Renate Featherstone, principal analyst at Wood Mackenzie and one of the authors of the report.

A base-case scenario sees this reaching 59%-60% by 2040 but an “extreme environmental regulation scenario,” limiting global warming to 2 degrees Celsius, sees collection rates soaring to 95% - a “brave new world where scrap is perceived as a precious resource rather than just waste,” Featherstone told Reuters.

This "would reduce primary metal demand by up to 35% for iron, 47% for aluminium and 34% for copper," the report says, adding that there will still be a need to mine and process primary metal due to rising demand and the inability of many metal applications to use scrap. (Graphic: Risk to primary metal demand from underutilised scrap - Woodmac, )

Co-author Julian Kettle, vice chair, metals and mining at Wood Mackenzie, said increased scrap usage “ticks a lot of the strategic boxes that companies and countries are thinking about at the moment,” including decarbonising, sustainability and - especially after the coronavirus outbreak - security of supply.

“You’ve got all this lovely scrap sitting in your own country. You don’t need to go outside, you don’t need to import. You just need to process it,” Kettle said.

Reporting by Tom Daly and Min Zhang; editing by Richard Pullin