In 2026, Australia’s scrap metal industry has evolved far beyond the image of the traditional “junk yard.” Today, it is a sophisticated $7.8 billion sector central to the nation’s circular economy and decarbonization goals. With major steelworks in Port Kembla and Whyalla shifting toward Electric Arc Furnaces (EAF), the demand for high-quality recycled scrap is at an all-time high.+2
Here is a guide to the landscape, regulations, and operational requirements for a recycling business in Australia.
1. Market Dynamics: Ferrous vs. Non-Ferrous
The industry is generally split into two categories, each requiring a different business strategy:
| Feature | Ferrous Metals | Non-Ferrous Metals |
| Examples | Steel, Iron, Cast Iron | Copper, Aluminium, Brass, Lead |
| Market Share | ~78% of the volume | ~22% of the volume |
| Profit Margin | Lower per kg; requires high volume | High value; lower volume needed |
| Source | Construction beams, car bodies | Electrical wiring, plumbing, HVAC |
2026 Trend: “Green Steel” is the major driver. Steel plants now prioritize “clean scrap” (low-contamination) to reduce emissions, meaning better sorting technology directly leads to higher profit margins.
2. Regulatory & Legal Framework
Operating a scrap business in Australia involves strict compliance to prevent metal theft and ensure environmental safety.
- The “Cashless” Law: Across most states (NSW, VIC, QLD, WA), it is illegal to pay cash for scrap metal. Transactions must be made via electronic transfer or cheque to ensure a traceable paper trail.+1
- Licensing: * NSW: You must register with the NSW Police Force under the Scrap Metal Industry Act.
- Victoria: You must be registered as a Second-Hand Dealer.
- General: You need an Australian Business Number (ABN) and potentially an Environmental Protection Authority (EPA) permit if you are processing hazardous materials (e.g., batteries or old machinery with oils).
- Record-Keeping: You are legally required to record the seller’s photo ID, the vehicle registration of the delivery, and a detailed description of the materials for every transaction.
3. Financial Requirements
Starting a scrap recycling business requires significant upfront capital, primarily for specialized equipment.
- Startup Costs: Expect a baseline investment of $80,000 – $250,000.
- Licensing & Admin: $2,000 – $5,000.
- Site Lease: $20,000 – $50,000 (must be industrially zoned).
- Equipment: $50,000 – $150,000 for essentials like certified industrial scales, magnets, and balers.
- Logistics: $10,000 – $30,000 for a crane truck or heavy-duty ute.
4. Operational Essentials
To stay competitive in 2026, modern recyclers are investing in technology:
- XRF Analyzers: Handheld devices that instantly identify metal alloys (e.g., distinguishing between 304 and 316 stainless steel) to ensure you aren’t undercharging.
- AI Sorting: Large-scale yards are now using AI-driven optical sorters to separate non-ferrous metals from shredder residue.
- Logistics: Success depends on your “inbound” strategy—securing contracts with local councils, demolition companies, or manufacturing plants.
5. Exporting Scrap
Australia remains a major exporter of processed scrap. However, the Recycling and Waste Reduction Act 2020 mandates that you cannot simply ship “waste.”
- Materials must be processed into a value-added state (e.g., washed, shredded, or baled to specific purity standards).
- You must hold a specific Waste Export Licence and declare each shipment through the WELD (Waste Export Licensing and Declaration) portal.
Environmental & Economic Impact
Recycling is no longer just a “side-hustle”—it’s a climate solution. Recycling aluminium uses 95% less energy than producing it from ore, while steel recycling saves roughly 60% of the energy required for primary production.+1
Note: If you are a foreign investor, Australian law typically requires at least one local resident director to register a Pty Ltd company.