Scrap metal has historically offered potentially lucrative business opportunities, but never more so than in the UAE today. Between 2024 and 2031, the Scrap Metal Recycling Market is expected to grow significantly, there really never has been a better time to set up here. In this article, we will explore the advantages and process of setting up a scrap business in Dubai, UAE. We will explore the following topics:
- Scrap metal business UAE – overview
- Growth factors for the scrap metal industry in the UAE
- Steps to start a scrap metal trading business in the UAE
- Documents required to start a scrap metal business in the UAE
- Are scrap metal businesses profitable?
- How Worldwide Formations can help
For a personalised quote and further details about the business setup process, our friendly advisors at Worldwide Formations are on hand and happy to help.
Scrap metal business UAE – overview
The scrap metal business involves buying, selling and processing scrap metal for a wide range of purposes, most commonly for manufacturing and recycling.
This metal comes from a myriad of sources, both ferrous and non-ferrous. Ferrous metals contain iron and include materials like HR trimming, steel, pig iron, cast iron and iron alloys. Non-ferrous metals include materials such as aluminium, brass and copper. In a previous life, these metals might have come from the industrial sector, motor vehicles, household goods, mining and foreign markets.
Most scrap metal business owners in the UAE choose from one of two options. They might decide to operate as a scrap metals dealer to resell to recycling plants. Or, they might choose to collect and scrap metals for other scrap metal dealers across the globe.
Growth factors for the scrap metal industry in the UAE
Scrap metal is a booming industry in the UAE, as well as across the world. It’s a no-brainer that a stronger economy helps specific sectors grow at accelerated rates. The construction industry is an excellent example. With more public and private sector investments, Dubai and the UAE are building commercial and residential properties at a phenomenal rate. And one clear winner from this construction growth is the scrap metal industry. However, that’s not the only growth factor for the industry:
- Increasing demand due to environmental factors
As governments and organisations step up their efforts to put less pressure on the planet, recycling scrap metal is becoming a viable green alternative. According to The British Metal Recycling Association, close to 400 million tons of metal are recycled globally each year, and the trend shows no signs of slowing down.
- Energy efficiency and conservation
Recycling scrap materials is significantly more energy efficient when compared with new ore. Recent data from the US Environmental Protection Agency indicates that recycling a single aluminium product can save enough energy to power a 60-watt lightbulb for more than four hours. In fact, the total energy saved could be as high as 92% for aluminium, 90% for copper and 56% for steel.
- Economy boosting
According to the National Recycling Coalition, recycling metal creates 36 more jobs than sending the same volume of metal to an incinerator. This helps generate tax and provides potentially thousands of green jobs to workers across the region. The Institute for Scrap Recycling estimates that at least half a million jobs have emerged from the scrap metal recycling industry. That’s a huge incentive for governments and institutions to promote the industry.
As a result, the scrap industry revenue in the UAE has accelerated in the past few years. The data indicates that this growth is here to stay, too.
Steps to start a scrap metal trading business in the UAE
Setting up a scrap metal trading business in the UAE can be a daunting prospect, so we have broken down the process into four straightforward steps.
Step 1: Name and define your business
First, you will need to choose a name for your scrap metal trading business. This will need to adhere to UAE naming conventions and should not be considered blasphemous or offensive in any way. You will also need to define your business activity to ensure you have the right licence.
Step 2: Choose your location
Next, you will need to choose whether you plan to operate in a free zone or mainland. Both locations have their advantages. For instance, a free zone setup enables you to enjoy 100% customs exemption, repatriation of profits and zero upfront capital but restricts you from trading with the wider UAE market.
To help get a better idea of which option is right for you, it’s worth getting in touch with our Worldwide Formations business advisors. As well as guiding you through the most appropriate options, we will be happy to share a free personalised quote tailored to your specific business needs.
Step 3: Submit your licence application form
Then, you will need to submit an application form for your business licence. You will need to provide a selection of documents, such as passport copies, visa copies, proof of residency if applicable, and evidence that your trading name has been reserved.
Step 4: Approval
Once your licence has been approved, you will need to apply for your Emirates identity card. This is a legal obligation for all business owners operating in the UAE. This will require you to undertake medical checks and tests.
Documents required to start a scrap metal business in the UAE
As discussed, to open your scrap metal business in the UAE you will need to provide a variety of documents. These include:
- Business registration certificate
- Evidence of membership to the Scrap Metal Dealer Association in Dubai
- Tax compliance certificate
- Business premises rental agreement
- Business permit
- Passport photos
- Details of company directors and shareholders if applicable
Are scrap metal businesses profitable?
Scrap metal businesses can turn into lucrative concerns. In fact, according to Metal Bulletin, the UAE is one of the leading suppliers of ferrous scrap worldwide. This offers staggering economic opportunities for everyone from multinational corporations to individual scrappers.
Business owners also benefit from inherent advantages. For example, metals make up a significant amount of landfill waste, which creates a constant source of stock. Scrap metal also has a high economic value because it is faster, cheaper, easier and more environmentally friendly to recycle than to mine. What’s more, scrap metal businesses require very little upfront investment, which means that you can maximise your profit margins from the outset.
How Worldwide Formations can help
Setting up a scrap metal business in Dubai can be a complex process, particularly for international entrepreneurs who are unfamiliar with local laws and regulations. At Worldwide Formations, we make company formation in the UAE quick and easy.
Over the years, we have helped thousands of aspiring business owners to turn their dreams into a reality in the UAE. We are a one-stop shop for company formation and value-added services ranging from bank account opening to VAT registration. Our award-winning business is located at Fairmont Dubai and DNATA Travel Center, for added convenience.
For more information and a personalised quote, please visit Worldwide Formations.