Accelerating Demand for Scrap Metals Drives Need to Prove Supply Chain Integrity

Demand for recycled metals is steadily climbing; Wood Mackenzie projects demand for steel scrap will grow another 200 million tons a year and aluminum by 75 million tons a year by 2040. With that trend, as with other commodities, the pressure is on to ensure supply chain integrity. In answer, commodities trading facilitator Orbex developed a trading platform for certified recycled metals.

“Orbex is driving much needed change by finally bringing globally-recognized standardization to an enormous market which, until now, has sat untapped and unimpeded,” says Thomas Buchar, Orbex CEO.

In this Q&A, Buchar tells how the platform works and what he sees as the greatest benefit to recyclers (with a big piece being support with GHG, ESG, and Scope 3 emissions reporting). He discusses trends in metals recycling in general, what’s driving them, and what he sees for the future.

Waste360: What is Orbex and how does it work?

Buchar: Orbex is the world's first global marketplace for authenticated recycled commodities, connecting buyers and sellers of sought-after recycled commodities.

Orbex's supporting technology incorporates a secure, authenticated recycled commodities registry, block-chain-enabled material traceability function, and a digital commodities transaction marketplace.  

The resulting ecosystem enables the independent authentication of recycled materials, transparency into the downstream supply chain, and allows for the transacting of verified recycled metals including steel, aluminum, copper, and other materials, between approved buyers and sellers.

Waste360: What must recyclers show to enter the marketplace?

Buchar: Material recyclers apply for Orbex membership against stringent, auditable standards that qualify them as an authenticated recycled commodities originator or an "ARCo."  Apart from verifying that they are removing recycled materials from the waste stream and returning them to the circular supply chain, an approved ARCo must be in compliance and in good standing with local and national regulatory bodies and relevant standards authorities.  

If approved, the ARCo registers qualifying materials on Orbex's global registry, enabling buyers to bid on listed commodities.  Orbex's proprietary traceability function tracks their consumption and use through the downstream supply chain, up to and including end users, who return the material as a new finished good, with full transparency throughout.

Full lifecycle, 360-degree circularity tracking can follow the finished good and its materials through its own end of life and return to a new origin, again as an authenticated recycled commodity.

Orbex enjoys some of the world's largest recyclers on the platform along with their downstream customers which include mills, smelters, finishers, and their own components and finished goods manufacturing customers.

Waste360: How did you design the platform with recyclers’ needs in mind?

Buchar: It's been rigorously tested by users throughout their sales, operations, compliance, finance, and administration functions at various levels within their organizations. 

 The greatest evolution on the platform revolves around meeting the growing need for GHG, ESG, and Scope 3 emissions tracking and reporting.  This has become a key feature set in a rapidly changing global marketplace. 

Waste360: What are trends in growing sustainable supply chains in the commodities space in general?

Buchar: The demands are growing throughout the supply chain not only with metals, but plastics and other GHG-intensive products suitable for reuse.  Quality, authenticity, and trust become key necessities so that suppliers and users can have belief in circularity claims.  

One pain point is transparency and participation.  Supply chains are complex and not having full participation makes the process more difficult.  It becomes incumbent upon buyers to push their upstream suppliers to provide the data and transparency necessary for comprehensive, accurate, and full accounting.  This all starts with the critical origin.  Its authentication and connection to its downstream users drives the foundation for this entire process.

Waste360:  What makes it hard to track metals along the whole supply chain?

Buchar: Metals often go through a complex supply chain and at various points can change molecular structures and compositions.  Traceability is still afforded, and technology has improved to support it, but it takes the willingness to cooperate on behalf of customers and the ecosystem to provide necessary tracking and data.

Waste360: What do the international markets for recycled metals look like?

Buchar: The market for recycled metals is truly global.  The international market is complex, dynamic, and rapidly changing.  Beyond the customary trade barriers and restrictions, ESG concerns and pressures on domestic sourcing are increasingly a factor.  For example, the U.S. (IRA) and the E.U. placed heavy incentives on keeping their recycled commodities for home use.  In the U.S., the percentage of domestic parts content of new vehicles weighs heavily on the popular electric car purchase tax credit.

Essentially, with secondary metals, processors today conduct international transactions whenever logistics and net yields dictate.  For certain materials and items that require further processing, like automotive Zorba, Asian markets are still a draw given the lower cost of labor-intensive separation processes.  Simply put, the higher the net separation value of the material, the further it will transact and travel.  

In addition to lower labor costs, some markets have looser government restrictions to help make their purchasing power a further advantage.  However, should yield premiums and regulatory incentives for domestic sourcing and ESG requirements increase their influence and impact, more materials may stay home. 

Waste360: What are the reporting obligations of players along the supply chain?

Buchar: There are evolving requirements in different markets worldwide. In the U.S., many new reporting obligations, such as ESG and Scope 3, are not yet required by the government, but could be by their investors and offshore customers in the E.U., Japan, or Canada.

Each participant in the supply chain has its own level of reporting requirements from local, state, federal, and now a growing body of international authorities, including those requiring ESG and Scope 3 reporting.  To complicate this further, requirements such as Scope 3 require up and downstream accounting, meaning cooperation and data sharing is necessary. Orbex enables the sharing and accumulation of data such as emissions tracking, making reporting more efficient and reliable.

Waste360: Are there real monetary payoffs in recycled commodities and, if so, what’s driving this?

 Buchar: Everyone up and down the supply chain agrees that sustainability is important and vital to not only the environment, but the future of how we do business. However, who is willing to pay for it?  

Orbex asserts that because of the incredible environmental impact and GHG emissions savings offered by recycled commodities and circularity, the increasing demand for them and their authentication will drive premiums in the supply chain for those that partake in producing and processing them.