Present Situation and Development Direction of Recycled Nonferrous Metal Industry in Our Country

Present Situation and Development Direction of Recycled Nonferrous Metal Industry in Our Country

1.The meaning of developing recycled metals

（1）The development of recycled metals has been upgraded to national strategy

According to the requirements from the reports of the 20th National Congress of CPC, the advancement of green economic and social development is the key link in the realization of high quality development; the reports require promoting green development and advancing the harmonious relationships between human beings and nature; to accelerate the green transformation of development mode, and accelerate the adjustment and optimization of industrial structure, energy structure and transportation structure; to implement a comprehensive conservation strategy, to promote the conservation and intensive utilization of various resources, and to construct a waste recycling system.

Developing recycled metal industry is an important means to realize our “3060” Dual Carbon target and construct economical society and intensive economy; it is an important path to achieve green, low-carbon and high-quality development; it is an inevitable course to advance the sound development of our nonferrous metal industry. For example, comprehensive energy consumption of recycled aluminum, copper and lead zinc respectively is 5%, 18%, 27% and 38% of that of primary metals, presenting significant effect of energy saving and carbon reduction.

（2）The development of recycled metals is the inevitable trend of the development of nonferrous metal industry

Using electrolytic aluminum as an example, electrolytic aluminum is a product with high energy consumption and high load capacity. Its power consumption accounts for over 10% of total industrial power consumption in China the same period, already becoming a big energy consumer. On the contrary, the unit product energy consumption and carbon emission of recycled aluminum respectively is just 5% and 2% of primary aluminum. Currently, electrolytic aluminum production capacity in our country has hit the ceiling and there hardly is any room for growth. The inventory of bauxite reserves of our country only accounts for 2.8% of the total in the world; capacity where domestic bauxite is utilized is 41600000 tons, and capacity where imported bauxite is utilized is 46240000 tons; the degree of dependence on imported bauxite reaches as high as 52.6%, and bauxite and alumina have become scarce resources. As far as copper is considered, global copper resource reserves released in 2020 was 2.478 billion tons, and our copper resource reserves accounted for 4% globally. Our raw copper and refined copper respectively accounted for 34.4% and 38.4% globally, while domestic copper ore self-sufficiency rate was just 24%. The development mode that copper and aluminum raw materials greatly rely on importation will not last. Therefore, recycled nonferrous metals will inevitably become the trend of the development of our nonferrous industry in the future.

Under the background of “carbon peak” and “carbon neutrality”, green and low-carbon recycled nonferrous metals products become popular among more domestic and foreign consumers. Major foreign developed economies have well established recycled nonferrous metal industry, and some countries and regions have succeeded in replacing primary metals with recycled nonferrous metals in terms of aluminum, copper and lead zinc materials consumption. Social savings of nonferrous metals in our country continues to increase. Currently, domestic social aluminum inventory is about 400 million tons, and copper inventory exceeds 100 million tons. It is estimated that used aluminum inventory by 2030 in our country will achieve 880 million tons, thus shaping the pattern of “urban aluminum mine”. By then, the supply of scrap aluminum in our country will reach 44 million tons, which will drive the development of recycled nonferrous industry. Primary metals fall, and recycled metals rise. In the future, recycled metals will gradually replace primary metals.

2.Overview of current recycled metal industry in our country

(1) Introduction of recycled nonferrous metals

Firstly: recycled aluminum

There are two kinds of scrap aluminum: new scrap aluminum (PIR) and old scrap aluminum (PCR). New scrap aluminum refers to process waste generated during product manufacturing by aluminum deep processing enterprises, manufacturers using aluminum products and casting manufacturers; and the scrap aluminum products that become scrap because of unqualified element and performance. Old scrap aluminum refers to the consumed aluminum products recycled from the market. Consumed scrap aluminum in application field includes cast aluminum alloy scrap (scrap unwrought aluminum) and deformed aluminum alloy scrape (scrap wrought aluminum).

Typical application of recycled aluminum: 1) The biggest consumption comes from die cast aluminum alloy, for example, auto shell components (such as cylinder head cover, gear-box shell, and oil sump), sensor bracket, electromechanical shell and cylinder block and so on. ADC12 is a trademark of aluminum alloy in Japan JIS standards; Al-Si-Cu alloy is a commonly-used die cast aluminum alloy, with outstanding mobility, moderate air tightness and excellent resistance to thermal cracking. 2) Recycled aluminum can be used in architectural profiles with no special requirements, architectural board and coating board with no special requirements, and can materials.

Secondly: recycled copper

Based on key technologies for precise impurity removal regulated by current smelting equipment and process parameter, and multi-process AI collaborative and efficient impurity removal and product quality improving regulating technologies, high-grade recycled copper enters anode furnace or converter; medium-grade recycled copper enters converter or Isa furnace; low-grade recycled copper enters Isa furnace. Full-process intelligent and precise impurity removal covering smelting-converting-refining can be realized, and main grade of anode copper can be maintained at 99%.

（2）Recycled nonferrous metal resources and capacity

In 2023, the production of recycled aluminum, recycled copper and recycled lead zinc was respectively 8650000 tons, 3750000 tons, and 4150000 tons, with the average annual growth of 5.3%. The proportion of recycled metals was still rather low. Taking recycled aluminum as an example, currently, in China, recycled aluminum just accounts for 17% of total aluminum supply (recycled copper accounts for 23%), while the figure is 73% in Japan, and 71% in USA. It is estimated that the production of recycled metals in 2025 will reach 20 million tons, including 11.5 million tons of recycled aluminum. So far the problem is the mismatch between raw material and capacity in recycled metal market. The contradiction is particularly prominent. For example, the recycled aluminum capacity has reached 18 million tons in our country. However, actual output last year was just 8650000 tons. Scrap resources in the market are in short supply, and competition is getting fiercer, leading to the growth in the price of resources, and resulting in the outcome that profit margin of enterprises reduces significantly.

From the perspective of raw material structure, in 2023, the importation of recycled aluminum was 1510000 tons, accounting for 17.7% of recycled aluminum raw materials; the importation of recycled copper was 1770000 tons, accounting for 42.9%. The pattern of “domestic recycling as the main source and imported raw material as the supplementary” has been shaped. The proportion of recycled copper exceeds that of recycled aluminum.

Domestic recycled aluminum manufacturers are mainly located in coastal areas, inland west area, Jiangxi, and Henan. Henan, Guangdong, Zhejiang, Hebei, Chongqing, Jiangxi and Shandong are 7 major areas where recycled aluminum industry concentrates, and total output in these areas account for 80% of total output nationwide. Yangtze River delta, The Pearl River Delta and Bohai Sea Rim are the biggest areas where recycled copper and copper processing industry thrives. 80% of the country’s copper processing enterprises are located in the three areas, where 75% of the country’s recycled copper are recycled and utilized.

Recycled aluminum and recycled copper enterprises are mainly located in coastal areas because these enterprises need to be close to consumption market, and a great number of consumption-end enterprises are distributed in coastal areas. Scrap resources mainly concentrate in Central China, such as Henan, Jiangxi, Linyi of Shandong and Sichuan and Chongqing, where there is an abundant supply of recycled metal resources.

(3) The flow of recycled nonferrous metal resources

Currently, domestic recycled aluminum enterprises are mainly engaged in casting aluminum alloy ingot, and some enterprises have made advanced deployments in processing blank such as wrought alloy flat ingot and cylindrical ingot. According to the calculation of Antaike, among all recycled aluminum products in our country in 2020, casting aluminum alloy accounted for 74%, and wrought aluminum alloy accounted for 23%, and the rest is deoxidizer for steelmaking. Casting aluminum alloy is mainly utilized in casting industry, such as auto components, kitchen and bathroom and lamps and lanterns. Wrought aluminum alloy is mainly utilized in consumer electronics, can metal packaging and auto-use aluminum. Quantity of wrought aluminum alloy processed materials last year in our country reached more than 35 million tons (including extruded material and plate and strip). In the long run, as the grade maintaining utilization keeps advancing, the proportion of wrought aluminum alloy will continue to rise. In terms of recycled copper, 62% recycled copper raw material flows to copper processing end (rolling category), and 38% recycled copper raw material flows to scrap copper smelting end.

In terms of the utilization of recycled copper, there are direct utilization and indirect utilization. Direct utilization refers to manufacturing copper products directly from scrap copper, such as copper rod, copper plate and strip and copper bar products, especially copper rod; indirect utilization refers to smelting scrap copper into refined copper, and then manufacturing copper products by processing. Copper processing factories use direct utilization and copper smelting factories use indirect utilization. So far the proportion of the both is half and half.

(4) Development phase of recycled nonferrous industry

The first phase is degrading use and unordered use, where low-end, medium-end and high-end products are recycled for unified production into casting alloy, which is simple technique and threshold. The second phase is grade-maintaining utilization, where high value-added wrought aluminum products such plates and profiles are recycled for refined sorting and for further production into new plates and profiles with type and quality not degrading. The third phase is recycled aluminum designing where the convenience of recycling is considered and incorporated into alloy composition and product initial designs, or designing new alloy for upgrading re-use based on the condition of recycled aluminum. So far this phase has not been kicked off in China, and it is commonly applied in foreign countries.

According to statistics, so far 80% of recycled aluminum in our country is finally used for aluminum castings, and only 20% wrought aluminum is used for grade-maintaining utilization, including 15% for aluminum rod and 5% for strip foil. That is to say, most recycled aluminum is finally used for degrading casting aluminum alloy.

One prominent problem in domestic recycled aluminum industry is degrading utilization, i.e. 80% recycled aluminum is used in die casting field. The average figure globally is 50%, and 80% is a very big proportion. In the long run, the application scenario and application field of wrought aluminum alloy will be broader; die cast aluminum alloy will inevitably decrease in volume, while wrought aluminum alloy will inevitably increase in volume. It can be considered that in the first half of year in China, casting aluminum alloy is the destination of recycled aluminum, and in the second half of year, wrought aluminum alloy is the destination. This is a trend, in that wrought aluminum alloy has a broader application and bigger capacity.

Furthermore, the fast development of NEV industry also advances the shrinking of die cast aluminum alloy industry. Fuel powered vehicle engine and gear box so far apply die cast aluminum alloy in quantities, and these components will reduce in the future. NEVs are in great demands for wrought aluminum alloy.

China is in the transition period from Phase One to Phase Two. As is mentioned before, 80% resources flow to casting aluminum alloy. This is a significant proportion of degrading utilization, and it is a rather low-end application field. Domestic enterprises will have to spend more efforts in technology R&D if they plan to enter Phase Three, and they need to re-enter recycling industry with the breakthrough point of grade-maintaining utilization. It can be considered that the recycled aluminum industry in our country is experiencing a critical phase to high quality development when the industry is in structural adjustment and products are in transformation. In the meantime, current national economic condition has yet not reached summit period when recycled metals become scrapped and come in and out of the market. As a result, primary metals still are the leading production raw materials.

（5）The problems in recycled nonferrous metal industry

Firstly, excess capacity. Low proportion of recycled metals; fierce resource contention; unordered competition; competition between enterprises; especially fiercer competition at raw material end; stage excess capacity of recycled aluminum; and low utilization of capacity.

Secondly, immature development of scrap aluminum transaction market. Imperfect specialized recycling; under-developed recycling treatment; disorderly management, scrap aluminum market being small and messy; high risks such as selling seconds at best quality prices; a great deal of cash transactions; scrap using enterprises being difficult to get their first Fapiao; heavy tax burden; policies varying in different regions; enterprises being not able to kick off businesses under the same policies; unfair competition; many problems to be solved to unify the big scrap aluminum market.

Thirdly, underdeveloped technology R&D and degrading utilization problem. After purchasing scrap aluminum materials from the market, most recycled aluminum enterprises re-melt them into casting alloy for degrading utilization after just simple dissembling and sorting. For example, in our country, recycling rate of scrap cans is almost 100%. However, many of the recycled cans are not for further can production, but for degrading utilization in manufacturing other aluminum processed goods. Some foreign advanced enterprises, such as Novelis and Hydro, can basically meet the requirements of grade-maintaining utilization, and can make full use of recycled aluminum. For example, Novelis realizes around 2000000 tons of grade-maintaining reuse of recycled cans one year.

Fourthly, the problem of the transformation of recycled aluminum. In our country, 60% of consumed recycled aluminum is utilized in manufacturing auto hub, Engine block and cylinder head, crankcase, intake tube and gear box, and most of these components are made of casting aluminum alloy. As traditional fuel vehicles fall and NEVs rise, the demands for Engine block and cylinder head and gear box will decrease, and NEVs’ aluminum components, such as four doors and the hood and tailgate, aluminum car body and battery pack, no longer use recycled casting aluminum.

Fifthly, the problem of importation of scrap copper and aluminum. The decrease in the importation of scrap copper and aluminum is mainly due to the restrictions by the government on importing foreign garbage. Although there is some decrease in the importation of scrap these years, importation of raw material will inevitably become a leading source for our country to acquire raw material in the future. This is because domestic supply of scrap metals is not sufficient enough to support capacity, and many enterprises have made overseas deployments and invested in the establishment of overseas raw material bases. This is a general trend. Aluminum is a kind of metal as well as a kind of energy storage metal. A great deal of energy is consumed for producing each ton of aluminum. Importing aluminum will help to reduce domestic energy consumption. From this perspective, it is indeed necessary to make deployments in constructing overseas scrap metal bases, thus reducing domestic mineral resources and energy.

3. Development trend in the future

（1）Development goals of our recycled nonferrous metals

In 2020, in our country, the production of recycled nonferrous metals accounted for 23.5% of domestic ten types of nonferrous metals. Based on the requirements listed in The 14th Five-Year Plan for the Development of Circular Economy, it is estimated that by 2025, the production of recycled nonferrous metals will reach 20 million tons, including 4 million tons of recycled copper, 11.5 million tons of recycled aluminum, 2900000 tons of recycled lead, and 1500000 tons of recycled zinc. It is estimated that the production of recycled nonferrous metals will reach 28 million tons by 2030.

（2）Development initiatives for the development of recycled nonferrous metals in the future

Firstly, the construction of fine sorting and distribution center: The construction of the center is a good idea to standardize policy implementation and raw material recycling. Specifically, to construct several big and standardized distribution center. The construction of the centers is to standardize each steps of the process from raw material recycling, utilization and transaction.

A critical segment in the construction of distribution center is sorting and treating raw materials. Private enterprises have made swift development in this aspect. Some big domestic private enterprises have made investments in scrap aluminum treatment field. Relevant equipment can conduct refined treatment on scrap aluminum collected from the society, and conduct sorting according to different types of alloys. This lays a good foundation for further grade-maintaining utilization. If the scrap aluminum collected from the society is not treated with this process, such scrap aluminum cannot be directly utilized by subsequent processing enterprise, thus leading to an obstacle between raw materials and subsequent utilization. Promoting the aforesaid equipment nationwide is a good way to break such obstacle.

Raw material recycling end and scrap utilizing enterprises have been strengthening weaknesses through completing fine sorting equipment. In the meantime, professional sorting and distribution centers are emerging in our country based on national policies. Under this circumstance, the quality and utilization value of recycled metals have been continuously improved, and a good foundation has been constructed for grade-maintaining utilization.

The pretreatment of fine sorting and the construction of processing and distribution center incorporate three aspects: Firstly, to meet the demands of raw material scaling. More and more enterprises step into recycled metals field, and the competition for raw materials is getting fiercer. This raises higher requirements for the securing of raw materials. Secondly, to meet the demands of raw material customization and diversification. This is because the demands for refined raw materials rise; and the demands for grade-maintaining utilization and high-value-added recycled metals. Thirdly, to meet the requirements of tax standard operation. This requires the implementation of the spirit and detailed regulations of No. 40 document. Furthermore, three aspects need to be taken into consideration. The first is the requirements of a certain scale of production capacity, land area and ecological red-lines; the second is hardware requirements such as environment protection equipment, sorting equipment and testing equipment; the third is energy consumption requirements, emission requirements, utilization of clean energy, and operation requirements of IT-based management including bill information and logistics information and so on.

Secondly, grade-maintaining and grade-improving utilization: As metal application scenarios increase, such as NEV, traditional low-value-added and degrading utilized die casting industry will gradually shrink. Grade-maintaining and grade-improving utilization will become a new trend, especially the utilizing proportion of wrought aluminum alloy will greatly rise.

Thirdly, tax policies and standards are to be improved: As the industry develops, our government will continue to issue documents to standardize local tax policies. With the help of information technologies (such as RecyCloud and Citymine), the standards of online transaction, tax payment receipt and “Five Flow into One” will be further improved. In the meantime, the improvement of recycled raw material standards and tax immediate collection and immediate withdrawal policy will facilitate scrap utilizing enterprises acquiring raw material and obtaining preferential taxation policy.

Fourthly, to actively make deployments in imported resources: The growth in domestic resources is less than the expansion of capacity. As raw material standards keep getting released, making deployments in imported resources becomes a new choice for scrap utilizing enterprises. Many recycled scrap utilizing enterprises are going global to make deployments in resources in Southeast Asia.