February 28, 2025
The scrap metal business in Kenya is a profitable venture due to the high demand for recycled metals in construction, manufacturing, and export markets.
The sector provides opportunities for both small-scale collectors and large-scale dealers.
With proper planning, compliance with regulations, and an efficient supply chain, you can establish a thriving scrap metal business.
The scrap metal business is profitable in Kenya due to four key reasons, namely:
Industries such as construction and manufacturing rely heavily on recycled metals for cost-effective raw materials, ensuring a consistent market.
The global push for environmental sustainability has increased demand for recycling, making scrap metal businesses essential for reducing waste.
Scrap metal collected at low prices can be sold to recycling plants or exporters at significant markups.
The business caters to diverse markets, including local buyers, manufacturing companies, and international export markets.
There are three main classes of scrap metals with considerable demand in Kenya include:
This scrap metal class includes all grades of iron and steel.
Commonly used in construction and automotive industries.
This category includes aluminum, copper, brass, and stainless steel.
Higher value than ferrous metals due to their wide industrial applications.
This class includes gold, silver, and platinum (often sourced from electronics).
Rare but highly valuable.
Let’s explore the steps involved in setting up a scrap metal business in Kenya:
Understanding the scrap metal market is crucial for success.
Key market research areas when starting a scrap metal business in Kenya include:
Identify buyers such as recycling plants, manufacturers, or exporters.
Explore sources like construction sites, factories, households, and landfills.
Analyze pricing, collection methods, and services offered by existing businesses.
Pro Tip
Focus on sourcing high-value metals like aluminum and copper for higher profit margins.
A business plan provides direction and helps secure funding if needed.
Key elements that should be part of your business plan include:
Decide if you’ll focus on collection, dealership, or both.
Identify target suppliers and buyers.
Include startup costs, operating expenses, and revenue projections.
Detail how you’ll collect, sort, and store metals.
Pro Tip
Highlight growth potential in your plan to attract investors or partners.
Operating legally is essential in the heavily regulated scrap metal industry in Kenya.
The business registration process entails doing the following
You can reserve and register your business with the BRS(Business Registration Service) via the eCitizen platform.
Obtain a license from the Scrap Metal Council of Kenya, as required by the Scrap Metal Act of 2015.
Apply for and obtain your SBP from your county government in-person or via the eCitizen portal.
The array of licenses required to operate a scrap metal business in Kenya include:
Costs approximately Ksh 250,000 annually for large-scale dealers.
Scrap metal collectors pay lower fees, around Ksh 50,000 annually.
Obtain clearance from the National Environment Management Authority (NEMA).
Required for setting up collection or storage sites.
Pro Tip
Compliance with regulations ensures smooth operations and avoids penalties.
Choose a location that supports efficient collection, storage, and transportation.
Pro Tip
Ensure your location adheres to zoning laws and environmental regulations.
Reliable sourcing is the backbone of a scrap metal business.
Viable Sources of Scrap Metal include:
Collect leftover steel, pipes, and other materials.
Partner with manufacturers for regular scrap supply.
Buy old appliances, pipes, or electronics.
Recover metals from discarded waste.
Pro Tip
Build relationships with construction companies, factories, and individuals to secure a consistent supply chain.
Offer fair prices to suppliers while ensuring profitability.
For example
Ksh 50 for 1kg scrap iron and steel
Ksh 500 for 1kg copper and aluminium
Pro Tips
Base your buying price on market rates for each type of metal.
Factor in transportation, sorting, and storage costs.
Offer incentives for bulk suppliers, such as higher rates or free pickup services.
Having the right tools ensures efficiency in sorting, cutting, and transporting metals.
Essential equipment for a scrap metal business includes:
Accurate measurements ensure fair pricing.
For downsizing larger metal pieces.
Helps sort ferrous from non-ferrous metals.
Trucks or vans for metal collection and delivery.
Gloves, helmets, and boots for workers.
Your buyers determine the profitability of your scrap metal business.
Potential scrap metal buyers include:
Purchase metals for reprocessing.
Use recycled materials in production.
Export high-value metals like aluminum and copper.
Pro Tip
Negotiate long-term contracts with buyers for stable revenue.
While very profitable, scrap metal businesses often face the following challenges:
Strict licensing and compliance requirements can delay operations.
Ensure all required licenses are obtained before starting.
Scrap metal theft can lead to legal issues and tarnish your reputation.
Vet suppliers and document all transactions.
Metal prices are affected by global market trends, leading to unpredictable profits.
Diversify your metal offerings to reduce dependency on one type.
Improper storage or disposal of scrap materials can harm the environment.
Follow environmental guidelines and partner with NEMA-approved recyclers.
A breakdown of expected startup costs for a scrap metal dealership is as follows:
Ksh 50,000–250,000.
Ksh 100,000–500,000.
Ksh 20,000–50,000/month.
Ksh 100,000–300,000.
Ksh 300,000–1,000,000.
An overview of projected earnings a scrap metal business is as follows:
Ksh 5,000–30,000 (depending on scale and volume).
Ksh 150,000–900,000.
10–30%, depending on operational efficiency.
The scrap metal business in Kenya offers lucrative opportunities for entrepreneurs willing to navigate its challenges.
By complying with regulations, sourcing quality metals, and establishing reliable buyer networks, you can create a sustainable and profitable business.
With increasing demand for recycled metals in both local and export markets, this industry has significant growth potential.
If you’re ready to dive into the scrap metal business, start by securing the necessary licenses and building relationships with suppliers and buyers.