EC to ban scrap exports? European recyclers up in arms

The European Commission (EC) is poised to impose a blanket ban on ferrous and non-ferrous scrap exports and an announcement to that effect is expected on 17 Nov'21. The EC has been reviewing its Waste Shipment Regulations since CY'20 in a bid to ensure "waste" is not exported from the European Union. The regulations, in force since 2006, have been updated from time to time. The last review has been under way since CY'20.

Why is EC contemplating the ban?
The EC will restrict regional exports of both ferrous and non-ferrous scrap in order to ensure local supplies of materials considered key in the metals industry's decarbonisation process and establishment of a circular economy, particularly in view of a recent surge in ferrous scrap export levels.

Impact expected

• Volumes impact: The EU is the largest ferrous scrap exporter, with almost 23 million tonnes (mn t) in seaborne trade in CY'20, much ahead of second-ranker USA (17 mn t) and third-ranked Japan (9 mn t). Consequently, the impending ban could affect ferrous and non-ferrous scrap trade to that extent.
  
  
• Scrap usage: The scrap used in steelmaking in the key importing countries is quite substantial. For instance, China leads the table with 229 mn t in CY'20, followed by EU-28 (77.54 mn t), USA (50 mn t), Turkey (30 mn t), Russia (almost 30 mn t) and Japan (29 mn t).
  
  
• Key countries to be impacted: Turkey has traditionally been the largest of EU's top five ferrous scrap buyers with volumes touching 14 mn t in CY'20 (of EU's total 23 mn t of seaborne trade). Others include Pakistan and Egypt with almost 2 mn t each, India (1.3 mn t) and USA (0.82 mn t). Countries which heavily depend on scrap generally lack iron ore as a key resource for steel-making, although in India's case it is mainly the secondary mills that depend substantially on scrap as an input along with sponge iron.
  
  

Reactions
European recyclers, however, have objected to this impending ban, warning that it would impact the circular economy concept.

The European Recycling Association (EuRIC) has sent a letter co-signed by nearly 300 European national recycling federations and companies to the European Commission, Parliament and Council urging EU leaders over the "potentially disastrous effects of a blanket restriction on exports of raw materials from recycling (RMR) in the upcoming waste shipment regulation (WSR) review".

Scrap metal, along with other recycled products, are RMR and should not be labelled as waste, EuRIC said. Metal scrap is currently labelled non-hazardous waste under EU law.

The letter urged EU to restrict exports to problematic waste streams and that a "one-size fits-all" solution with no distinction between untreated problematic waste streams and RMR will run against the objectives of the EU Green Deal.

EuRIC president Cinzia Vezzosi said export restrictions without having "secured" end markets in the EU "pose a vital threat" to European recyclers.

"They will result in massive green job cuts and put a lasting brake on the growth of one of the most dynamic industries in Europe, for no environmental gains," Vezzosi said. "Worse still, with unhampered imports of extracted raw materials in Europe, the competitiveness of RMR will drop and thus the incentive to properly collect, recycle, and invest will be lost, putting at risk the ability to achieve present recycling targets set by legislation," he added.

Scrap and environment
Scrap-based production typically uses a fraction of the energy used in production using virgin materials.

Around 630 mn t of steel scrap is recycled globally annually, preventing nearly 950 mn t of CO2 emissions. If the foundry sector added, annual CO2 emission savings are seen at over 1 billion mt, as per BIR.

Outlook

Any blanket ferrous scrap export ban may be unlikely, due to the high volumes of this material generated within the EU, particularly heavy melting scrap (HMS), which would not be fully absorbed by the domestic EU market. The ban may also disrupt scrap trade flow, fuel a global shortage and price rally.