The machinery scrap business in Australia is a dynamic and essential component of the nation’s circular economy.1 Far from just being waste disposal, it involves the strategic recycling of end-of-life industrial, construction, mining, and agricultural equipment, turning valuable materials back into the supply chain.
For entrepreneurs and businesses looking to enter or operate within this sector, understanding the market, its value streams, and the robust regulatory framework is crucial.
💰 Market Overview and Value Streams
The Australian scrap metal recycling industry is a multi-billion dollar sector, with industrial and heavy machinery providing a consistent and high-value source of material.2
1. High-Value Materials in Machinery
Heavy industrial equipment (like excavators, generators, dump trucks, and CNC machines) is rich in high-demand metals. Proper sorting and processing are key to maximising profit.3
| Metal Type | Source in Machinery | Value Indication (AUD per kg) |
| Copper (Non-Ferrous) | Wiring, motors, alternators, hydraulic components | High (often $$$7.20 – $$$11.10+) |
| Brass (Non-Ferrous) | Fittings, valves, bushings | High (often $$$3.50 – $$$6.00+) |
| Aluminium (Non-Ferrous) | Engine blocks, casings, components | Moderate (often $$$0.75 – $$$2.00+) |
| Stainless Steel (Non-Ferrous/Alloy) | Industrial equipment, tanks, fixtures | Moderate (often $$$0.80 – $$$2.00+) |
| Steel/Iron (Ferrous) | Machine chassis, bulk frame parts | Low (High Volume) (often $$$0.10 – $$$0.35) |
Note: Prices are indicative and fluctuate daily based on global commodity markets.4
2. Market Drivers
- Decarbonisation Trend: Recycling steel and other metals uses significantly less energy than producing them from virgin ore, aligning the industry with Australia’s net-zero goals.5
- Domestic Demand: Major players like InfraBuild use local scrap in their steelmaking operations, strengthening the domestic supply chain.6
- Global Commodity Prices: Scrap metal prices are heavily influenced by global supply and demand, particularly from markets in Southeast Asia and the Far East, where much of Australia’s processed scrap is exported.7
📜 Regulatory and Legal Compliance
Operating a machinery scrap business in Australia requires strict adherence to state and federal regulations, primarily aimed at preventing metal theft and ensuring environmental compliance.8
1. State-Specific Licensing and Registration
In most states (e.g., NSW, Victoria), you must register your business as a Scrap Metal Dealer or Second-Hand Dealer.9
- NSW: Governed by the Scrap Metal Industry Act 2016.10 Registration is mandatory and enforced by the NSW Police Force (SLED).11
- Victoria: Requires registration as a second-hand dealer under the Second-Hand Dealers and Pawnbrokers Act 1989.12
2. Mandatory Transaction Rules
The most significant change in recent years across multiple states is the ban or strict limitation on cash payments for scrap metal.13
| Requirement | Details |
| No Cash Payments | Dealers must use traceable methods like bank transfers (EFT) or cheques. This provides an audit trail to combat the sale of stolen goods. |
| Record Keeping | Dealers must maintain detailed records of every transaction, including the seller’s verified Proof of Identity (e.g., driver’s license), the type and weight of the metal, and the payment method, for a minimum period (often three years). |
| Suspicious Activity | Dealers are legally obligated to report any transaction suspected of involving stolen or unlawfully obtained scrap metal to the police without delay. |
| Motor Vehicles | Additional strict rules apply to end-of-life motor vehicles, including verifying vehicle identifiers and compliance with written-off vehicle registries. |
3. Environmental and Safety Permits
Handling large machinery and industrial waste requires specific approvals:
- Environmental Protection Permit: Mandatory for handling and storing waste, especially for items that may contain hazardous materials like asbestos, oils, or lead-acid batteries.14
- Local Council Approvals: Zoning permits are needed to operate a scrap yard, typically in an industrial zone.15
- Workplace Health & Safety (WHS): Compliance is critical due to the risks associated with dismantling, cutting, and lifting heavy equipment.16
🛠️ Key Steps for Starting a Business
- Develop a Niche-Specific Business Plan: Focus on a profitable niche, such as demolition scrap, e-waste, or heavy industrial equipment, and identify consistent suppliers (e.g., construction companies, mining sites, farmers).
- Register and License: Obtain an Australian Business Number (ABN), register your business structure (often Proprietary Limited – Pty Ltd), and secure all required state-level Scrap Metal Dealer licenses and local council permits.17
- Establish Operations: Secure a yard in a zoned industrial area with good road access.18 Essential starting equipment includes an industrial weighbridge, heavy-duty cutters/shears, a magnet for sorting, and a transport vehicle.19
- Build a Network: Establish relationships with industrial scrap generators and, most importantly, with end-users like smelters, foundries, and bulk export buyers who will purchase the processed material.20
🚀 The Future: Processing and Sustainability
The Australian machinery scrap sector is moving towards higher-value local processing.21 There is increasing industry pressure to limit the export of unprocessed scrap and instead invest in sophisticated technologies like shredders, balers, and granulation plants. By moving up the value chain, Australian recyclers aim to supply cleaner, higher-grade feedstocks to both local manufacturers and premium international buyers, cementing the industry’s role in a sustainable, resilient national economy.