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Mahindra-MSTC To Set Up Auto Scrap Plant; May Invest Rs 120 Crore

New Delhi: State-run metal scrap trading firm MSTC today signed a joint venture (JV) agreement with Mahindra Intertrade for setting up of an auto shredding and recycling plant, which can cost around Rs 120 crore.

The idea behind the JV is to meet India’s annual scrap requirement of 5-6 million tonnes (MT), which at present is done through imports, the market for which is estimated in the range of $1.8 billion (about Rs 12,000 crore).

“The total investment for setting up the shredding plant having a capacity of 1 lakh tonnes per annum and the collection centers is expected to be about Rs 120 crore,” Steel Ministry said in a statement.

The plant will have the capacity of one lakh TPA, it added.

Mahindra Intertrade is a part of Mahindra Partners Division of the $17.8 billion diversified Mahindra Group, while the mini-ratna public sector undertaking (PSU) isengaged in the export of ferrous scrap.

Speaking to reporters after signing the agreement, MSTC CMD B B Singh said: “Demand for vehicles was 23.34 million in 2015. It brings to fore the issue relating to scrapping of end of life vehicles (ELVs) and when you consider these, the JV has immense potential for further growth in India.”

India imports around 5-6 MT of scrap every year, which again reiterates the need to set up a shredding plant in the country. The JV is starting with a single unit, but is also looking at a pan-India presence, he added.

At present, scrap is being imported at around $200-300 a tonne. Keeping in view the country’s annual requirement, the market is in the range of $1.8 billion.

This first-of-its-kind auto shredding facility will establish an automotive recycling capability for ELVs from collection, compaction, transportation, depollution, dismantling, shredding, recycling, and disposal, Mahindra Intertrade Managing Director Sumit Issar said.

“We will set up one plant now that is likely to come up in a location in Gujarat or Maharashtra. Its capacity will be about 1-1.5 lakh tonnes depending on the product mix and will begin commercial production by March 2018,” he added.

The JV agreement was inked in presence of Steel Minister Chaudhary Birender Singh and Steel Secretary Aruna Sharma by Singh and Issar.

Steel Minister said the initiative will give boost to the’Make in India’ programme by providing a source of specialised steel.

He added that PPP mode is the way forward for bringing in latest technology into recycling of high-grade (auto-grade) steel and providing high-grade raw material to steel plants in the North India as well.

“He said there is need for zoning of collection centers in the country and more such plants can be set up in the country in future,” the Ministry said quoting the Minister.

On investments, Issar said: “It is a sizeable one. We will start with one, but will later scale up to a lot of plants.”

When prodded further on expansion, the country has immense potential for growth in this space. The firm expects India’s scrap requirement to grow to as much as 15-20 MT in the next 5-10 years. A country like the US alone has 150-200 auto- shredding plants.

Mahindra Partners Managing Partner Zhooben Bhiwandiwala said the facility will transform the way automotive scrap is effectively recycled in a sustainable manner.

As the plant will use ELVs aged more than 10 years and white Goods, recycling it will also conserve natural resources such as iron ore, coal, limestone, etc, which are used in making steel, Singh said.

Locally available scrap would help reduce the cost of production of secondary steel makers, while hi-tech shredding using better technology and machinery would help the country significantly reduce pollution, Issar said.

Scrapping old vehicles will help recover significant amounts of steel scrap, aluminium scrap, plastic and rubber.

Besides vehicles, the plant will also scrap white goods like air-conditioners, refrigerators, which after usage for a long period become unserviceable for further operation.

The main shredding plant will shred ELVs and white goods and separate the ferrous components via magnetic separation, Steel Ministry said.

The rest of the output from the main shredding plant is processed through the eddy current separator for non-ferrous material to yield two mixtures of non- ferrous metals called Zorba (which is predominantly aluminum) and Zurik (which is predominantly Stainless Steel) in addition to the main output as shredded scrap.

A down-stream non-ferrous separator could be used further to separate the Zorba and Zurik to its component metals so as to tap the market of non- ferrous metals like aluminum, copper and others, in India, it added.

The shredded scrap will help secondary steel sector for its raw material requirements resulting in reduced dependence on imports.