Business Models in Australian Scrap
The industry is generally divided into three tiers:
| Tier | Focus | Primary Revenue Source |
| Collector / Itinerant | Small-scale pick-ups | Residential white goods, small site clean-ups. |
| Scrap Yard / Dealer | Sorting & Consolidation | Buying from collectors; selling processed loads to exporters or mills. |
| Processor / Exporter | Heavy Industrial | Shredding, baling, and international shipping or domestic smelting. |
3. Legal and Regulatory Requirements
Starting or running a scrap business in Australia requires navigating a strict “paper trail” designed to combat metal theft and environmental damage.7
The “No Cash” Laws
In almost all Australian states (including NSW, Victoria, and QLD), it is illegal to pay cash for scrap metal.8 Transactions must be made via electronic funds transfer (EFT) or a cheque that cannot be cashed over the counter.9 This ensures a traceable financial audit trail.
Licensing & Compliance
- Scrap Metal Dealer Registration: You must register with the state police or relevant authority (e.g., the Scrap Metal Industry Act 2016 in NSW).10
- EPA Permits: Dealing with “end-of-life” vehicles or hazardous components (like lead-acid batteries) requires Environment Protection Authority (EPA) licensing to ensure no soil or groundwater contamination.
- Export Licenses: If you plan to ship scrap overseas, you must hold a waste export license under the Recycling and Waste Reduction Act 2020.11
4. Operational Trends for 2026
Success in today’s market depends on technology more than manual labor:12
- AI Sorting: Large yards are increasingly using AI-powered optical sorters and X-ray fluorescence (XRF) scanners to instantly identify high-value alloys, significantly increasing the purity—and price—of their output.13
- Sustainability Branding: Corporations now seek “Green Certificates” for their waste. Recyclers who can provide data on carbon emissions saved are winning lucrative contracts with construction and mining firms.
- Specialization in “Strategic Metals”: New profits are found in the recovery of rare earth metals from e-waste and lithium-ion batteries, which were previously overlooked in traditional scrap yards.
5. Challenges to Consider
- Energy Costs: High electricity prices impact the profitability of heavy machinery like shredders and balers.
- Global Volatility: While domestic demand is growing, Australian scrap prices are still heavily influenced by the LME (London Metal Exchange) and Chinese construction demand.
- Contamination Limits: Exporting countries are tightening “purity” requirements. Scrap that contains more than 0.5%–1% non-metal contamination is often rejected at international ports.