How to Start a Metal Scrap Business in Dubai?

They say you can build an airy city out of ruins. Have you ever heard the story of a poor man who turned rich with just a dead mouse in the blink of an eye? Here’s the catch. If you have got the business skills, you can make money out of even scrap. Yes, scrap can do wonders (literally!)! Don’t you believe it? See for yourself how Delhi, the capital city of India, has recreated the world’s seven wonders using scrap with panache! Imagine what it can do to you if it’s your business in times when sustainability is on the radar of every country across the world, including the United Arab Emirates. If you are certain to get into the scrap business in Dubai, the most sought-after emirate of the UAE for doing business, you are sure to be rolling in money in no time just like Scrooge McDuck. With the government zeroed on making the UAE the easiest testbed for business experiments in the world, Dubai welcomes all the new business ideas with open arms! Anyone can start any type of business in the Emirate’s business-friendly environment. All you need to have is – financial stability, the skills to do all-out market research before launching the business and thorough knowledge of the steps involved in setting up a scrap business in Dubai.

The UAE comes on the list of top-tier suppliers of ferrous scrap worldwide as per Metal Bulletin. Scrap metal is acquired from myriad sources, including industry, home products, automobiles, and international markets, among others. Objects from Africa, South Asia, and the Far East are frequently transported to the United Arab Emirates and thereupon sold as junk throughout the sphere. Not to mention, Dubai is the best pick for investors to start a scrap metal business. Widely used for industrial purposes, ferrous metals include steel, pig iron and alloys of iron with other metals. The world is your oyster with scrap business in Dubai. You may engage in diverse types of ferrous metals like heavy melting scrap, light melting scrap, shredded steel scrap, plates and structure scrap, fabrication scrap, tin can bundles, re-rollable scrap, boring and turning scrap, CRCA bundles/bushelling bundles, CRGO sheets and more.

What type of scrap business is the best option in Dubai?

Most individuals know the benefits of doing scrap business but are living under the rock when it comes to choosing the type of business in the scrap industry. Whether they should engage in scrap trading or scrap recycling? Where the former is buying and selling waste items and the latter is recycling and transforming the scrap material into useful products. If you are one of them, know that it totally depends on the budget you have for your scrap business setup in Dubai and your market knowledge along with the risk-taking capabilities. As a scrap trader, you can make good money by selling scrap material to huge corporations that recycle them for further usage. On the other hand, if you choose to become a scrap recycler, you buy the scrap from scrap traders to convert the stuff into some meaningful good for profit. Generally, the recycling business is a popular option among business persons who want to make remarkable profits and at the same time wish to conserve the planet. Because when these items are recycled, tons of energy and resources are saved while keeping the environment clean. A scrap trading business setup can be achieved by installing a buying station to transfer scrap metals to recyclers or by having your own warehouse. You can opt for any of the ways and start making massive amounts of money in the scrap business. If you want to learn how to start a scrap business and make money, keep reading.

Understand the structure of the industry

You must be well acquainted with the scrap metal industry before you take a plunge into the scrap business. You’ll must precisely be able to identify the scrap you want to sell or buy for trading or recycling proposes. To comprehend the scrap metal industry structure from business’ perspective, you have to picture a pyramid. Now at the bottom of it place the small roaming dealers (also known as totters or rag and bone men) who go door to door of householders and small businesses for scrap collection. Traditionally they did not have premises to hold the stuff but piled scrap until they had their vehicle chock-full of it, at which point they would sell it all to a larger scrap metal dealer. Although plenty of small and part-time dealers still operate the same way, currently there are fewer of these itinerant scrap collectors and many dealers have a property or yard where they roughly sort the different metals and perhaps stockpile them until they have collected a good quantity to sell on to another larger merchant aka yard merchants. These also are fewer nowadays, as the equipment used in the process costs the earth. They process the different scrap metals they handle, discard contaminated material and slashing the scrap to a manageable size. They purchase scrap from smaller dealers and also from businesses such as engineering works and may consider selling it off to even larger merchants who can conclude the refining processes before supplying the scrap to the end-users, the steel mills within or outside the country. The steel mills will only accept scrap as furnace feedstock if it has been processed to very strict specifications. For example, it must be free from contamination up to the hilt and organized to a particular size and weight. Only the largest merchants, aka mill merchants sitting in the top of the virtual pyramid, are the direct suppliers of the scrap to the steel mills. These large dealers may also export scrap overseas when demand is strong.

Most profitable scrap businesses in the UAE

A recycling company setup in Dubai is a smart idea. But what to scrap for money, you may ask. Recycling of waste metal, plastic, vehicle (junk cars), batteries, gold, electronic waste, medical waste, paper, water and construction materials are some of the most rewarding businesses in Dubai, UAE. If you are planning to begin a scrap metal business in Dubai you must be able to recognise and sort various metals. To do so, first, inspect the metal’s ferromagnetism with a magnet. The majority of your scrap will most likely be made up of five key metals-

  • Iron & its alloy, steel, has myriad applications and are likely to be the most frequent metal you’ll scrap
  • Another metal that will most likely make up the majority of your scrap is copper. It’s non-ferromagnetic and weighs somewhat more than iron. Copper is used in wiring and high-quality cookware
  • Aluminium is a non-ferromagnetic metal which is quite light in weight. It is as common as iron
  • Bronze is a copper alloy that is far less valuable and has a lighter, almost gold tone
  • Lead is a soft yet heavy metal. It’s commonly utilised in bullets and as a radiation barrier

Before you initiate your scrap business in Dubai or wherever, develop a fair understanding of the metals. If you scrap E-waste, you’ll likely stumble upon rarer, more precious metals.

How to start a scrap metal company in Dubai?

Whether you wish to start a scrap metal trading business in Dubai or set up a scrap metal recycling company in Dubai, you must take three essential aspects into account first and foremost – the amount of scrap metal on hand, the warehouse or scrap depository, and the safety measures taken in the holding area. In addition, do not forget to study your potential consumers’ profiles and define the target market in line with the analysis done. Like any other business setup in Dubai, the process of scrap metal business formation in Dubai also involves several steps to take. Here’re they:

Step1: Determine the type of scrap business and conduct research and analyse the metal scrap market in line with that

Bear in mind that you will be competing with other scrap dealers for sellers’ waste metals. Lack or no preliminary market research is the major cause of business failure. Unsurprisingly, the very first step of any business formation in any country is to do market research and feasibility study. So is with your scrap business setup in Dubai. You must be aware of the scrap market in the preferred location as per the business activity you have decided to conduct in the scrap industry. You may choose to either:

  • collect scrap from local sources and export it to major scrap importing nations in neighbour, such as China or India,
  • import the scrap and further sell it to local scrap buyers,
  • or to process the scrap materials yourself.

Your market analysis will help you decide which business model will be most profitable and feasible for you.

Step2: Find a suitable commercial space for scrap business

You must be capable of holding enough scrap to remain operational? And for that you need an adequate yard. Therefore, locating and leasing an appropriate property to store and process the collected raw materials becomes the next step. In most cases, the business location is a selling point as well. You can’t expect much return on investment with a business location with limited buyers in the vicinity. Furthermore, you also must keep the annual rent of the property in mind while taking your location decisions, as the cost of your scrap business setup in Dubai might also be affected by the price of the chosen site. Not to mention, the costs of tools and equipment required to run the scrap business such as metal sorting, shipping containers, forklift, bins, and other necessary sorting gears that you might be needing in the yard. A business formation guide not only can help you find the best location for your scrap business in Dubai but also keep your business setup costs low. Thus, it is highly advisable to involve one of the best business setup advisors in Dubai like Adam Global into the most important project of your life before leasing a yard or warehouse for your Dubai-based scrap business.

Step3: Prepare a business plan and get initial approvals

The next step is to prepare a blueprint of your scrap business setup that outlines your business’s financial goals and demonstrates the ways to achieve them. A powerful, detailed plan will offer a road map for the business’s next three to five years, and you can share it with relevant authorities to receive the permits or licences, mandatory to run the business in the beginning and later with potential investors, lenders or other important partners. Yes, you might be required to present your business plan along with the other relevant documents to the licencing and other relevant authorities (if applicable) in the selected jurisdiction to obtain initial and then final approval, which is a must for the scrap business licence, the main official document to be able to do business in Dubai, UAE.

Step4: Obtain the business licence and carry out your business activities

Once you’ve successfully walked the pre-business setup such as obtaining initial, external and final approvals and collecting the trade or commercial licence from relevant authorities and post-business setup steps such as opening a corporate bank account, purchasing a business insurance, buying a payment gateway, hiring quality staff, etc., you are free to run your scrap metal business in Dubai. The entrepreneurship journey could be full of bumps, however with a qualified scrap business formation advisorsuch as Adam Global the sprint can be effortless and straightforward like a cakewalk. They will not only help you in the initial phases of the business setup process but also make the post-business formation to-dos a lot easier by jumping through the hoops on your behalf. You may also approach them for management consultancy to run your business efficiently. Remember, this is your first time but it is not for them. Your business setup advisor has already dealt with this sort of businesses in Dubai and other emirates of the UAE, so they know what you might not know. They will also guide you on how you can take advantage of the Dubai’s business-friendly environment for achieving a huge return on investment. Therefore, by hiring an experienced business setup consultant in Dubai you not only will save your time, energy and money but also be able to keep from hefty mistakes and ahead of your competitors.

A piece of advice from a leading scrap business setup consultant in Dubai

Launching a new business is exhilarating, but there are many pitfalls for the gullible who are wet behind the ears. Some aspiring entrepreneurs cling so firmly to their step-by-step guides that they don’t see what’s really going on. Others get so carried away with potential problems they lose sight of the bigger picture. Our two cents for them is the same what the serial entrepreneur Norm Brodsky advises they have to have a perspective to stay focused on the true goals and grab opportunities the moment they crop up. For any assistance regarding your scrap metal business in Dubai, Sharjah, Abu Dhabi, Ras Al-Khaimah or any other emirate of the country, whether in the beginning, middle or after, feel free to get in touch with the Adam Global Dubai team, one of the best business setup advisory companies in Dubai, UAE. Your first consultancy is on us!

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