Rubble Riches

Virender Rawat, a dealer in Mumbai8217;s busy Kurla metal scrap market, prefers to trade only in local scrap. The imported stuff, he says, ...

Virender Rawat, a dealer in Mumbai8217;s busy Kurla metal scrap market, prefers to trade only in local scrap. The imported stuff, he says, is too dangerous and requires a lot of funds to grease palms in the regulatory system. 8216;8216;It8217;s not a risk worth taking as I have seen people getting killed in this business,8217;8217; says Rawat.

They have, indeed. In the aftermath of the Ghaziabad incident involving Bhushan Steel, the nation is waking up every morning to rockets popping up from creeks and corners. Meanwhile, thousands of workers across India8217;s hundreds of steel foundries are manually sorting out containers of heavy metal scrap for re-use in the industry.

What is going on? Industry insiders say the import of scrap 8212; which is used by steel plants to heat up the furnace as well as by the sheet rolling industry 8212; is a margins game in a well-oiled system, where any consignment can be cleared from the 8216;clutches8217; of Customs for just Rs 10,000 per container.

According to a conservative estimate, India imports 13 to 15 million tonne of metal scrap every year. At an average price of between 200 to 300 a tonne, that makes for an Rs 15,000 crore metal scrap industry. It8217;s a lucrative industry: Budget 2004 scrapped the import duty on scrap, and now there is only a 12 per cent countervailing duty.

There were two warning signals in the Bhushan Steel case. One, the scrap was imported from West Asia 8212; and, at 239 a tonne, it was relatively cheaper than the industry average.

Steel re-rollers prefer war ammunition as it contains expensive metals like copper, lead and tank metal which makes importing ammunition more lucrative. Says M Sengupta, CMD of Kolkata-based Metal Scrap Trading Corporation of India: 8216;8216;We get our consignments inspected by independent international agencies at the originating port. Usually, the scrap imported from the Gulf and Africa contains war ammunition as both are volatile regions due to war and rebellion. We avoid war scrap.8217;8217;

According to scrap importers, typically, a Delhi importer places his order with an exporter in Dubai via an agent. To cut corners, the Dubai exporter, in turn, places his order from a war zone since scrap is cheapest there. While in other countries, scrap price ranges between 250 to 300 per tonne, from a war zone the price drops to 130 to 150 per tonne.

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The Dubai trader ships the scrap directly from Iran to India with a certificate saying it8217;s not war ammunition. As per documents, the Indian importer is getting the consignment from Dubai. With a little help from the bureaucracy, 8216;8216;there is hardly a way one can find the origin of the scrap being imported.8217;8217;

8216;8216;Scrap dealers are only looking for margins. Even a 5 per cent drop in prices makes a huge difference,8217;8217; says Vijay Kalantri, Chairman of All India Association of Industries. 8216;8216;You can land radioactive bombs in the country and no one will know,8217;8217; he warns.

Scrap importers say price varies in keeping with global steel price movements. When steel prices are high, a consignment which is already on the ship will fetch a better price than one which will be shipped in, say, 30 days. So, importers often don8217;t wait to get a proper shipment from a safe or a distant destination.

Moreover, a declaration stating that there is no ammunition in the scrap being imported is enough for the Customs department. Steel re-rollers who have already imported war ammunition are now expecting a massive crackdown after the Ghaziabad accident.