Chiho Environmental Group Ltd., one of the world’s biggest metal recyclers, says rampant demand for scrap material is set to strengthen as the global rush to fight climate change becomes more urgent.

The Hong Kong-listed company sees a flurry of net-zero targets from governments and corporates accelerating the demand for scrap, as supply chains scramble to source cleaner materials. This comes as the industrial rebound from the pandemic boosts metal prices from copper to lithium.

"We have gone through two world wars, two major economic shocks. Now we have a pandemic and we see one of the most significant demand boosts ever for recycling metals,” Chief Executive Officer Rafael Suchan said in an interview.

Chiho in 2016 acquired Germany’s Scholz Holding GmbH, which traces its origins back to 1872.

Chiho expects steel scrap volumes and recycling rates for aluminum to roughly double in the next five-to-10 years in China. The country has been snapping up more steel scrap after restrictions were relaxed at the start of the year, while the nation’s top copper smelters last month recommended a limit on new capacity and the use of more scrap to help meet the country’s climate goals.

The nation will be the biggest scrap recycling market, as well as the largest consumer and the driver of commodities, Suchan said. He expects relatively stronger recycling demand for non-ferrous metals rather than ferrous materials in the current commodity cycle.

Electric Vehicles

Steel demand will grow moderately, while China is set to export much lower volumes, he said, given the environmentally-driven hike in taxes effective from this month.

Demand for copper and aluminum will rise significantly to meet the electric vehicle market, as new infrastructure that requires more nonferrous materials was needed, according to Chiho.

Chiho is also looking to improve its EV battery recovery rate to 90% or beyond from its current 60-70% level, adding that it’s in discussions with battery and automotive groups, as well as metals producers to develop partnerships regarding the supply of recycled raw materials.

Meanwhile, the recycler has been approached by plastics and rubber producers, who are "feeling the pressure” to become more circular, according to Suchan. "The circular economy, is becoming, I wouldn’t say a buzzword, but it’s in everybody’s mouth.”

 - Bloomberg