Scrap Metal Supply Chain Modelling for Economic and Environmental Sustainability in Zimbabwe Using the Case for Bulawayo Metal Industries

Transcription

1 National University of Science and Technolgy NuSpace Institutional Repository Industrial and Manufacturing Engineering Industrial and Manufacturing Engineering Publications Scrap Metal Supply Chain Modelling for Economic and Environmental Sustainability in Zimbabwe Using the Case for Bulawayo Metal Industries Sarema, B. National University of Science & Technology Sarema, B. Goriwondo W. M. Mhlanga M. Zimwara D. Scrap Metal Supply Chain Modelling for Economic and Environmental Sustainability in Zimbabwe Using the Case for Bulawayo Metal Industries. MPSOM Proceedings, 24 th 25 th March 2015, Victoria Falls: Downloaded from the National University of Science and Technology (NUST), Zimbabwe

2 6th International Conference on Manufacturing Processes, Systems and Operations Management World Class Competitiveness and Sustainability in the Global Market for Manufacturing Organisations in Africa 24 th 25 th March th MPSOM PROCEEDINGS Elephant Hills Resort Victoria Falls Zimbabwe ISBN June 2015

3 SCRAP METAL SUPPLY CHAIN MODELLING FOR ECONOMIC AND ENVIRONMENTAL SUSTAINABILITY IN ZIMBABWE USING THE CASE FOR BULAWAYO METAL INDUSTRIES B. Sarema 1 *, W. M. Goriwondo 2, S. Mhlanga 3 and D.Zimwara 4 1, 2 &4 Department of Industrial and Manufacturing Engineering National University of Science and Technology, Zimbabwe blesarema@gmail.com 1 wgoriwondo@gmail.com 2 davison.zimwara@gmail.com 4 3 Department of Industrial Engineering, University of Johannesburg, South Africa smhlanga126@gmail.com 3 ABSTRACT Although Zimbabwe has one of the largest known iron ore reserves of more than 45 billion tonnes, world reserves are expected to last for 155 years only at the current extraction rates. Sustainable development requires that we use the resources whilst preserving them for future generations. In order preserve metal resources there is need to turn to secondary sources or scrap metal. Scrap metal recycling has to be made a profitable venture to attract investment. This paper develops a model for recycling scrap metal for environmental and economic benefit using the Bulawayo metal industries. The industries produce a total of tonnes of scrap metal worth about USD per month. The city however processes only tonnes of scrap metal worth USD per month. Scrap metal worth USD is exported outside the city whilst the remainder accumulates in different industries or is dumped at dumpsites. The foundries that process scrap metal on the other hand are operating at about 15 % capacity utilisation. This situation is not sustainable as some of the scrap metal is disposed into the environment. A model for recycling scrap metal that is economically and environmentally sustainable is proposed. The model is centered on forming linkages with the mining sector for the supply of mill balls. The mining sector was targeted because of its current performance, providing over 50 % of the export earnings. The demand for mill balls for mines near Bulawayo is ascertained. Foundries capacity utilisation can be improved to about 80% by producing mill balls for the mining industry. The model also improves the recycling efficiency from 35.8 % up to 100%. Vensim system dynamics software is used in the comparison of the current and proposed system and the projections for the next 10 years. Key words: Scrap metal; environmental sustainability; economic sustainability 41

4 1 INTRODUCTION Metals are essential engineering materials because of their properties like strength, ductility, thermal and electrical conductivity. During their life cycle non-functional pieces of metals find their way into the environment. These pieces are referred to as scrap metal. Scrap metal is produced during manufacture of the metals themselves, metal products and at the end of the metal product s life cycle. Scrap metal disposal is a headache to those who generate it and to the general public at large. Those who generate scrap metal incur costs for its disposal else may resort to irresponsible and illegal dumping that causes environmental pollution. The dumped scrap metal is a threat to the people and the environment, as such there is need for an economically viable and environmentally friendly way of dealing with the full life cycle of metal products. This project addresses how economic benefits can be derived from eliminating the environmental hazards posed by scrap metal disposal in Zimbabwe using the city of Bulawayo as a case study. The economic benefits are derived from the use of scrap metal for the production of new products that do not pose a risk of pollution during their life cycle. 1.1 BACKGROUND Zimbabwe has become a nation that depends on imports for finished products and an exporter of raw materials. There has been a wide spread call for value addition to raw materials, but scrap metal has not been viewed as an important raw material but as a waste rather. The government policy on scrap metal has not been clear. Export of scrap metal was banned in August 2004 only to be lifted in 2010 (Ministry of Finance Zimbabwe, 2010). Most companies in Zimbabwe import metal products that are produced from scrap, in some cases the same scrap metal that is exported from Zimbabwe. This creates a negative balance of payments and thus becomes economically unsustainable. There are several foundries located in Zimbabwe that have potential to produce the imported products locally. Plans have been underway to resuscitate the former Zimbabwe Iron and Steel Company (ZISCO) now NewZim Steel, this is a noble idea, but with scrap metal lying around everywhere in the country and some being exported the extraction of virgin materials is uncalled for to a certain extent. Recycling scrap metal utilizes less energy compared to processing ores thus reducing the carbon footprint of the process. It is clear that while the export of scrap metal is increasing following the lifting of the export ban, the local output from the scrap beneficiating industry (Foundries) is decreasing. 2 RELATED LITERATURE 2.1 Theoretical framework Wernick & Themelis (1998) says metals can be recycled indefinitely, but recycling can only be economically sustainable if the cost of retrieving and processing of scrap metal is kept lower than the cost of primary processing, but Allenby, (1992) argues that to realize the complete metal recycling model, industry and society should work together to recover metals by re-circulating metals from all secondary sources and losing a minimum amount of material from the industrial and social system while Graedel et al (2011) developed some mathematical models of measuring recycling rates for over 60 metals. The development of a sustainable economic and environmental scrap metal recycling model depends on the costs of recycling, and the target products will determine the overall efficiency of the model. 42

5 2.2 Primary metals The price of metals is determined by a combination of factors that include extraction technologies and other market dynamics (YII edu, 2013). Figure 1 shows price of the most common used metals from the year 1980 to 2013 and the forecasted price to the year 2025 according to the World Bank, (2013). Iron, Lead, Aluminium, Copper, Tin Silver and Gold are some of the highest used metals (Tilton, 1990). Metals are not usually used in the pure form but rather are combined to form alloys. Ferrous alloys are predominantly iron based and are by far the most used metals in the world accounting for more than 90 % of metal uses in the world. Figure 1: Iron ore, Lead, Aluminium and Copper actual and forecasted prices (World Bank, 2013) Metal resources are non-renewable and the threat of extinction is of metal resources in the world is imminent and there is advocacy of turning towards secondary sources. YII edu, (2013) estimated the number of years metal reserves will last with Iron ore reserves expected to last for 155 years, Aluminium 400 years and Copper 47 years, with this threat of extinction there is need to turn to secondary sources of metals for sustainability. 2.3 Secondary metals Secondary metals include all metals that have entered the economy, but no longer serve a purpose (Wernick & Themelis, 1998). The secondary sources consist of new and old scrap metal. New scrap metal is sometimes termed prompt scrap or pre-consumer. It originates from a fabrication or manufacturing process as shown in Figure 2 (Janke et al., 2000). New scrap has known properties, high purity, and value, hence its recycling is generally economically beneficial and easy to accomplish, although recycling becomes more difficult the closer one gets to finished products. New scrap is typically included in recycling statistics (Mester & Hageluken, 2009). Old scrap or postconsumer scrap is metal in products that have reached their End-of-life. Their recycling requires more effort, particularly when the metal is a small part of a complex product (Graedel et al., 2011). 2.4 Recycling Metrics The recycling of metals is widely viewed as a fruitful sustainability strategy, but little information was available on the degree to which recycling is actually taking place globally until Quinkertz et al (2001) 43

6 and Graedel et al (2011) developed some recycling metrics for measuring the prevailing degree recycling. While the terms recycling rate and recovery rate are often used interchangeably in the literature, they usually refer to two different measures, noting that recovery, or reclamation, precedes recycling. Quinkertz et al (2001) expanded these terms further to cover the various stages of recycling as shown schematically in Figure 2 while Graedel et al (2011) used the developed recycling metrics to estimate the global scale of recycling for over 60 metals. Figure 2: Metal products life cycle showing recycling metrics The most important metrics associated with recycling are the collection rate, recovery rate, recycling efficiency and recycled content. These are calculated as shown in Figure 2. An 89% collection rate of for lightweight aluminium packaging material, and a recycling rate of 67% were reported in Germany by Quinkertz et al (2001). 2.5 Scrap metal disposal in Zimbabwe Scrap metal disposal in Zimbabwe is discussed to some extent by (Mudzengerere & Chigwenya, 2012) and (Musademba et al., 2011) they looked at solid waste disposal in the cities of Bulawayo and Chinhoyi respectively. From their findings it is evident that the bulk of scrap metal is not handled by the local authorities. Metallic waste is the least found in municipal dumpsites. This is because most of the scrap metal is generated by industry and manufacturing companies are required to manage their waste (Mudzengerere & Chigwenya, 2012). This is a dangerous perception as the companies may resort to illegal dumping and disposal. The dumping costs are estimated at $ 9 per tonne in Bulawayo whilst new scrap metal costs between $120 and $140 per tonne. 3 RESEARCH METHODOLOGY A research is guided by the philosophy behind the project, the approach to be used, strategies to be adopted, research methods to be used, time spans, techniques and procedures to be followed (Saunders et al., 2009). The accumulation of scrap metal and the subsequent lifting of the export ban of the same drive the notion that the foundries in Zimbabwe have no capacity to absorb all the scrap metal produced in the country. The research philosophy of realism is thus adopted to discover the reality of this notion independent of the mind. This research seeks to test the hypothesis that the foundries in Zimbabwe have no capacity to process the scrap metal generated locally, thus a deductive research approach is adopted. A case study research strategy is adopted for the study. The case study focused on the Metal industries in Bulawayo. The research seeks to establish the 44

7 quantities of scrap metal produced in Bulawayo and the capacity of foundries in Bulawayo thus quantitative methods are used. The study is conducted in a cross-sectional time horizon. The population of the study is determined from the Bulawayo metal industries and data from sample companies is collected. Data is collected using document analysis, interviews and questionnaires. The collected data is analysed and interpreted to accept or reject the null hypothesis. 3.1 Research questions The research is developed from quantitative point of view. The research seeks to answer the following research questions; i. What are the quantities of scrap metal produced in Bulawayo? ii. What is the type of the scrap metal produced in Bulawayo? iii. What is the capacity of foundries in Bulawayo? iv. What are the products that can be made from the scrap metal to improve recycling efficiency and capacity utilisation taking into account linkages with the mining industry? v. What is the best model to recycle the scrap metal? 3.2 Population and sampling The population of this research consists of three focus groups that are scrap metal generators, foundries and foundries customers in Bulawayo. A pilot survey conducted established that there are a total of 20 companies that produce new scrap. Non-probability judgmental sampling was used to select the top 5 new scrap metal producers to make a sample size of 25 % of the population. It was established that Bulawayo has 10 functional foundries and 8 were selected for the purposes of this study to give a sample size of 80 %. Foundries supply products across the whole spectrum of the economy, but to improve the utilisation they need to focus their production systems to better performing industries at a particular time and as such the target is set to supply consumables to the mines on the southern part of the country; there are two platinum mines and 20 gold mines in the region. Again non-probability sampling was used to determine the sample size to represent the gold mines. Judgment sampling was used in particular to use the top 5 gold producers as the sample thus the sampling size was 25 % of the population. The whole population was used for platinum mines. 3.3 Methods and techniques Document analysis, questionnaires and in-depth interviews with key personnel were used to determine the exact amount and type of scrap metal produced from the industries. Foundries were visited in Bulawayo to determine their range of products, source of raw materials and operational capacities. Again document analysis, questionnaires and in-depth interviews were used. The last focus group was the mining industry, this group was judgmentally selected as the one that the foundries can have linkages that are able to improve the operations of foundries. From this group the researcher looked for the demand of mill balls, which can be then made from scrap metal so as to improve the capacity utilisation of the foundries as well as reduce the amount of scrap metal that is eventually disposed to the environment. 4 RESEARCH FINDINGS 4.1 Scrap metal generation in Bulawayo Most companies in Bulawayo process ferrous metals compared to non-ferrous metals hence the percentage of ferrous scrap metal is more than that of non-ferrous scrap metal. Scrap metal in the 45

8 city is mainly divided into new scrap and old scrap. Table 1 shows the summary of the monthly quantities of new and old scrap metal in Bulawayo. Table 1: Bulawayo monthly scrap metal data in tonnes Ferrous Non Ferrous Amount processed New Scrap metal Amount processed New Scrap metal Total Estimated Old scrap metal available Estimated accumulation rate of Old scrap metal Total Ferrous metals constitute 92 % and non-ferrous metals constitute 8 % of the total amount of metals processed in Bulawayo. These percentages however do not automatically translate to the same percentages of scrap metal produced. It was determined that only 6 % of new scrap metal produced Bulawayo is non-ferrous scrap while ferrous scrap metal constitutes 94 % as shown in Figure 3. This implies that the scrap production rate of processing ferrous metals and non-ferrous metals are different. More scrap metal is produced when processing ferrous scrap compared to processing nonferrous scrap. The scrap rate production of ferrous scrap metals is 11 % in Bulawayo currently compared to 8 % for non-ferrous scrap metals. Figure 3: New scrap metal generation and distribution from Bulawayo Metal industries The pie chart shown in Figure 3 suggests that the local foundries have no capacity to consume the scrap metal generated from Bulawayo. New scrap that is exported is first processed as shown in Figure 4. Figure 4: New and Old scrap metal in Bulawayo 4.2 Foundry operations in Bulawayo The furnaces in Bulawayo have a total capacity to hold 94 tonnes of per charge giving a monthly output of 2469 tonnes. Current capacity utilisation stands at tonnes per month which is

9 % of the capacity. The types of furnace may determine the type of products that can be made. Figure 5 shows the summary of the types of foundries in Bulawayo. The information pertaining to the types of scrap metal processing in Bulawayo is shown in the Venn-diagram in Figure 5. Generally there is no problem in the disposal of non-ferrous metals due to the high prices in the scrap value of nonferrous scrap metal. Figure 5: Types of furnaces and metals processed in Bulawayo foundries 4.3 Foundry products in Bulawayo Foundry products are diverse in nature though the constituent elements of the charges do not vary a lot. Some of the products supplied by the foundries in Bulawayo and the charges are shown are listed in Table 2. It can be seen that % of the total material is recycled material. The unavailability of pig iron has also pushed the inclusion of recycled material to at most 80 %. The foundry is a purely jobbing environment operating on make to order bases. There is need to employ a hybrid system that enables foundries in Bulawayo in order to improve their capacity utilisation. The hybrid system should be composed of the current make to order and a proposed make to stock for the manufacture of grinding media like mill balls that are in high demand currently. Table 2: Typical charge composition for foundry products based on case study foundries cast iron brake shoes Mn steel mill liners Hyper steel mill balls Ingredient or composition of charge Mass (kg) % Mass (kg) % Mass (kg) % Scrap cast iron % Pig Iron % % % Scrap steel % % % Coke % Silicon % Manganese % % Limestone % Chromium % Molybdenum % Nickel % Total % % % Of all products that can be manufactured from scrap metal for the mining industry mill balls have got one of the shortest life cycle. Once scrap metal is used for the production of mill balls one is almost 47

10 100 % guaranteed that the scrap metal will not end up in the environment again. Mill balls production can be able to solve the problem of scrap metal disposal as well as foundries capacity utilisation since they can be standardised for a variety of applications in mining industries. The demand for mill balls for the mining companies near Bulawayo was assessed. The production of mill balls has another advantage that mill balls do not require further machining once they are cast. 5 MODEL FORMULATION In order to improve the environmental and economic sustainability of scrap metal recycling in Bulawayo there is need to increase the amount of scrap metal recycled. This is done by introducing a hybrid manufacturing system in the foundries so that they operate on make-to-order and make to stock basis. A standard product in the form of hyper steel mill balls is proposed to be made. This will enable foundries to form supply chain linkages with the mining industry that is better performing. Figure 6 shows how the economic and environmental factors can be addressed to improve the sustainability of scrap metal recycling in Zimbabwe. Figure 6: Addressing economic and environmental sustainability of scrap metal recycling The proposed conceptual model shown in Figure 7 can be represented by a system dynamics model shown in Figure 8. The total amount of scrap metal produced in Bulawayo is a summation of both the new scrap metal and old scrap metal of both ferrous and non-ferrous metals. The usage of scrap metal is composed of the absorption by the local foundries, exports and foundries outside Bulawayo. The remainder either accumulates inside the companies premises or finds its way to the dumpsite. The model is a concept of the supply and demand system which is represented in causal form. The major factors that make up the model are represented as stocks and flows in the stock and flow diagram. 48

11 Figure 7: Proposed hybrid system for foundry operations The stock variable used for the model is the supply balance that is represented by scrap metal dumping or accumulation. The supply chain should balance or give a positive graph flow. The flow variables for this model are the total scrap metal produced and the total scrap metal used. To reach an optimum solution the make to stock system is going to increase its production from zero until the capacity of the foundries is reached or until the scrap metal produced in Bulawayo is finished. In the event that the scrap metal is finished before capacity is exhausted recommendations can be made to import scrap from other parts of the country and from other countries. 6 RESULTS Figure 8: Vensim System Dynamics Model for scrap metal flow in Bulawayo Data gathered from the survey was set as the initial parameters of simulation. The results obtained from the simulation using Vensim software represent the current state of affairs as far as scrap metal generation and utilisation in Bulawayo is concerned. The other runs are then compared 49

12 Tonnes MPSOM Proceedings, 24 th 25 th March 2015, Victoria Falls, Zimbabwe relative to this current run. The run acts as the standard or the control run. Figure 9 shows how scrap metal dumping changes by meeting the demand for mill balls. Equilibrium between supply and demand for mill balls is reached when meeting about 14 % of the demand. Thereafter the city can actually import scrap metal to exhaust its foundry capacity. 20,000 Scrap metal dumping or accumulation -5,000-30,000-55,000-80,000 Figure 9: Comparison of scrap metal dumping or accumulation in Bulawayo The demand for mill balls currently stands at tonnes per month and assuming that this demand is met by Bulawayo foundries the capacity utilisation of the foundries can be pushed to tonnes per month from the current tonnes per month. This model increases the capacity utilisation of the foundries in Bulawayo to a maximum of about %. If the current situation persists for the next ten years there would be tonnes of scrap metal disposed into the environment the scrap metal value is estimated at USD 0.60 million. A total of tonnes of new scrap would have left the city to the value of USD 6.6 million. A comparison of the current system with the proposed system indicates that the foundries in Bulawayo should start making mill balls to improve their capacity utilisation from the current % to a maximum of %. 7 DISCUSSIONS Time (M onth) Sc rap me ta l dumping or a ccumulation : P roposed 100 % Sc rap me ta l dumping or a ccumulation : P roposed 50 % Sc rap me ta l dumping or a ccumulation : P roposed 25 % Sc rap me ta l dumping or a ccumulation : P roposed 20 % Sc rap me ta l dumping or a ccumulation : P roposed 15 % Sc rap me ta l dumping or a ccumulation : P roposed 10 % Sc rap me ta l dumping or a ccumulation : P roposed 5 % Sc rap me ta l dumping or a ccumulation : Curre nt Scrap metal recycling is a lucrative business in many countries. In Zimbabwe very few companies and individuals want to be part of the scrap metal recycling business, particularly in the scrap metal collection. There are many stakeholders in the recycling business. These stakeholders include; government, scrap metal generators, scrap metal collectors, foundries and the customers. Government is responsible for policy formulations that promote scrap metal recycling. Scrap metal generators should view the scrap metal they produce as a by-product rather than as waste. Scrap metal collectors perform a very important task in the whole product life cycle of a metal product. 50

13 The foundries contribute a lot to the processing of the scrap metal into usable products that are required by their customers. Import substitution should also be taken seriously especially when awarding tenders to foreign companies. The foreign companies should be encouraged or obliged to support local companies. Figure 10 shows an imported manhole cover that could have been easily made in the country, or substituted by a casting from scrap metal. 8 CONCLUSION Figure 10: Imported cement casting manhole cover Scrap metal recycling can be turned into a lucrative business venture. The determination of the right product mix is important for the foundries who are the key players in the recycling business. Foundries in Zimbabwe have for long been considered as jobbing environment that operate on a make to order basis. The adoption of standardised products can enable foundries to use hybrid systems and incorporate make to stock production systems. Foundries supply products to a variety of clientele, but they really need to align themselves with the sector that is doing well at a particular time. In Zimbabwe the mining sector has been contributing the highest revenue to the fiscus for the past five years and foundries have not benefited fully from the mining sector. The mining sector has been importing some consumable like mill balls that can be easily made locally. The proposed hybrid system for the foundries in Bulawayo can increase the capacity utilisation of the foundries to 80 %. Export and dumping of scrap metal is also avoided by making mill balls. In the next 10 years scrap metal worth USD 7.2 million would have been produced by Bulawayo metal industries. It is thus important to view this scrap metal not as a waste but a very important raw material whose value addition is important to the Zimbabwean economy. REFERENCES Graedel, T.E., Buchert, M., Reck, B.K. & Sonnemann, G.., (2011). Recycling rates of metals. A Status Report. New York: UNEP United Nations Environmental Programme. Janke, D., Savov, L., Weddige, H. & Schulz, E., (2000). Scrap-based steel production and recycling of steel. MATERIALI IN TEHNOLOGIJE, 36, pp Mester, C.M.E. & Hageluken, C., (2009). The impact of pre-processing routes on precious metal recovers from personal computers. In European Metallurgical Conference. GDMB, Clausthal- Zeller-Feld. 51

14 Ministry of Finance Zimbabwe, (2010). Mid-term Fiscal policy review. Harare: Ministry of Finance, Zimbabwe. Mudzengerere, F.H. & Chigwenya, A., (2012). Waste Management in Bulawayo City Council in Zimbabwe: In search of sustainable waste management in the city. Journal of Sustainable Development in Africa (Volume 14, No.1), pp Musademba, D.; Musiyandaka, S.; Muzinda, A.; Nhemachena, B; Jambwa, D, (2011). Municipality Solidwaste (MSW) Management Challenges of Chinhoyi town in Zimbabwe: Opportunities of Waste Reduction and recycling. Journal of Sustainable Development in Africa (Volume 13, No.2), pp Saunders, M., Lewis, P. & Thornhil, A., (2009). Research Methods for Business Students. 5th ed. Essex: Pearson. Tilton, J.E., (1990). World Metal Demand-Trends and Prospects. Washington: John Hopkins University Press. Wernick, I.k. & Themelis, N.J., (1998). Recycling metals for the environment. In Annual Review of energy and environment. New York, World Bank,(2013). Commodity Price Forecast Update. World Bank. YII edu, (2013). YII edu. [Online] Available at: %20_1_%20-%20Occurence%20and%20extraction%20of%20metals.pdf [Accessed 30 January 2014]. 52