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How to Start Aluminium Ingot Manufacturing from Scrap in India

How to Start Aluminium Recycling
Contents 9 sections
  1. What does an aluminium ingot plant cost, and what decides the margin?
  2. Which aluminium ingot should a new manufacturer make first?
  3. How is aluminium scrap turned into ingots?
  4. Which machines does an ingot plant need?
  5. Which aluminium scrap pays, and where should you buy it?
  6. Which licences and approvals does an ingot unit need?
  7. Who buys the ingots, and what can go wrong?
  8. What should you do first?
  9. Frequently asked questions

Aluminium ingot manufacturing means melting sorted aluminium scrap, correcting its chemistry with alloying metals and casting it into ingots that die-casters and foundries buy by grade. Your profit is the gap between what you pay for scrap and what a buyer pays for a graded ingot, after melt loss, fuel and labour. The gap is thin, so the order of your decisions matters more than the furnace.

Settle three things before ordering any machine: where the scrap will come from, which alloy a named buyer will take, and what consent your state pollution board will give the site. Scrap is the hard question in 2026, because the Ministry of Mines says secondary producers import 80 to 85 per cent of their raw material. Start on domestic scrap, sell against a buyer's written specification, and add imports only once both are running.

What does an aluminium ingot plant cost, and what decides the margin?

Plant size sets the investment; scrap price sets the margin. In the NPCS project report on aluminium ingots from aluminium scrap, a plant making 14 tonnes of alloy ingots a day needs plant and machinery of ₹7 crore and total capital investment of ₹33.15 crore. Smaller units cost less, mainly where they omit shredding, decoating and fume-treatment lines.

The table shows where each tonne makes or loses money.

Cost lineWhat moves itPressure in 2026
Scrap purchaseGrade, domestic or imported, dutyDuty, freight and supply gaps push it up
Melt loss and drossPaint, oil, moisture, furnace typeMixed painted scrap loses more metal than clean offcuts
Alloying metals and fluxesSilicon, copper, magnesium for the gradeSet by the buyer's specification
Fuel or powerFurnace type, batch sizePart-filled batches waste fuel
Working capitalScrap paid on delivery, ingots sold on creditLonger buyer credit ties up cash

Whether the unit pays depends on the scrap-to-ingot spread between the day you buy and the day you sell. Fix the selling rate when you buy scrap wherever the buyer allows.

Which aluminium ingot should a new manufacturer make first?

This page covers secondary aluminium, made from scrap. Primary metal is smelted from alumina in a different kind of plant; see how alumina is made.

IngotScrap it suitsWho buysDifficulty
Die-casting alloy (ADC12, LM24 type)Cast parts, wheels, clean mixed scrapPressure die-casters for automotive and two-wheeler partsModerate: tight silicon and copper limits
Foundry alloy (gravity and sand casting)Cast scrap, sheet, extrusion offcutsLocal foundries making pumps, fittings, utensilsLower: wider limits, many small buyers

Extrusion billets need clean extrusion offcuts and a different casting line, so treat them as a separate project.

How is aluminium scrap turned into ingots?

  1. Weigh and sample the scrap. Reject sealed containers and wet lots, and trial-melt before accepting a large consignment.
  2. Sort by alloy, then cut or shred large pieces so the furnace feeds evenly.
  3. Pull out iron with a magnet and dry or decoat oily and painted scrap, since coatings and moisture cause metal loss and fumes.
  4. Charge the furnace and melt, adding flux so the oxide layer separates.
  5. Skim the dross off the surface and send it for metal recovery.
  6. Add silicon, copper or magnesium to reach the buyer's grade, test the chemistry on a spectrometer and adjust.
  7. Degas and filter the melt to remove dissolved hydrogen and inclusions.
  8. Cast into moulds, cool, stack, number each heat and issue a test certificate.

Which machines does an ingot plant need?

MachineWhat it does
Cutter or shredder, magnetic separatorSizes the scrap and pulls out iron
Decoating or drying kilnBurns off oil, paint and moisture before melting
Tilting or rotary furnaceMelts mixed scrap in batches; induction suits only clean, sorted feed
Holding furnaceKeeps metal hot while the chemistry is corrected
Degassing unit and filterRemoves hydrogen and inclusions
Ingot casting machineMoulds the metal into uniform ingots
SpectrometerConfirms alloy chemistry heat by heat
Fume extraction and bag filterCaptures furnace emissions, which the pollution consent depends on

Which aluminium scrap pays, and where should you buy it?

No grade is profitable by name. The one that pays has a discount to ingot price that exceeds its melt loss and processing cost on your furnace. Clean single-alloy scrap such as extrusion offcuts, sheet cuttings and cable recovers the most metal. Painted, oily, thin or mixed scrap is cheaper per tonne but needs the decoating kiln. Dealers sell by trade names such as tense, so insist on a sample and a recovery trial. Beverage cans are a separate stream: see aluminium can manufacturing.

Imports are riskier for a new unit. India imported about 2.02 million tonnes of aluminium scrap in 2025-26, and Gulf countries banned scrap exports from 10 June 2026, a ban expected to run to 8 October, so check whether it was extended. Scrap carried 2.5 per cent customs duty as of July 2026, when the Mines Ministry recommended removing it, while the Aluminium Association of India wants a BIS scrap standard notified first. Confirm the duty before signing an import contract. Domestic dealers, foundries and extruders are the safer first source, as in copper scrap recycling.

Which licences and approvals does an ingot unit need?

ApprovalFromWhy it matters
Udyam registration and GSTGovernment portalsGST for invoicing; Udyam for MSME schemes and bank finance
Consent to establish and operateState pollution control boardCategory depends on furnace, fuel and hourly capacity; apply before building
Hazardous waste authorisationState pollution control boardAluminium dross is listed as hazardous waste in the 2016 waste rules
Factory licence and fire NOCState factories department, fire serviceFurnace floors get inspected
Import-Export CodeDGFTOnly if you import scrap

BIS certification is not compulsory right now. A 2023 order was due to make the BIS Standard Mark mandatory on aluminium alloy ingots and castings (IS 617), but the Ministry of Mines withdrew it on 13 November 2025 and can reinstate it. Buyers still ask for a chemistry certificate, so keep spectrometer records.

Who buys the ingots, and what can go wrong?

Die-casters supplying automotive and two-wheeler makers, foundries and traders buy by grade and want a heat-wise test certificate. Three risks recur:

  • Price lag: scrap bought today becomes ingot weeks later, so a fall in metal prices eats the spread.
  • Quality drift: one bad scrap lot spoils a heat, and the buyer rejects it.
  • Compliance: fumes from coated scrap and dross disposal draw notices when filters and waste records slip.

What should you do first?

  1. Get written ingot specifications from two die-casters or foundries near you, and ask what monthly tonnage they would give a new supplier.
  2. Buy five-tonne sample lots from two scrap dealers and run recovery trials.
  3. Ask your state pollution board which category your furnace and fuel fall under before buying land.
  4. Collect quotations at your intended capacity from two furnace makers.

An NPCS project report on this product sets out capacity, plant and machinery, raw materials, manpower, working capital, break-even and cash flow in the format banks usually ask for. NPCS has prepared project reports since 1994 for clients in 85 countries. Read its numbers against your own scrap price and buyer terms. For more scrap-based ideas, see recycling business ideas.

Frequently asked questions

What is the price of 1 kg of aluminium ingot?

There is no single price: it changes daily and differs by grade. Indian trade quotes ingots per tonne, so divide by 1,000 for a per-kg figure. Primary ingot from producers such as Nalco follows the global metal price; alloy ingots like ADC12 trade at their own rate. Check Nalco's published price circular, BigMint or alCircle spot reports, and the day's LME or MCX rate.

Is the aluminium recycling business profitable?

It can be, but the margin is narrow and depends on the scrap-to-ingot spread, melt loss and how quickly you sell. Units with a fixed buyer, steady clean scrap and strict chemistry checks do better than traders buying whatever is cheapest. Test your plan at a smaller spread than today's.

Which company manufactures aluminium ingots in India?

Nalco, Hindalco and Vedanta make primary aluminium ingots from bauxite. Alloy ingots from scrap come from many small and mid-sized recyclers, usually near automotive and foundry clusters.

What are the disadvantages of recycling aluminium?

Melting still uses fuel or power, coated and oily scrap releases fumes, dross is hazardous waste needing authorised disposal, and some metal is lost in every melt. Mixed scrap is harder to control, and imported scrap exposes your cost to duty and supply changes.

Can a small unit start with an induction furnace?

Yes, if the scrap is clean and sorted, such as extrusion offcuts. Painted, oily or mixed scrap melts better in a tilting or rotary furnace after decoating. Choose by the scrap you can buy steadily.

Written and reviewed by

P.K. ChattopadhyayProject Consultant, Niir Project Consultancy Services (NPCS)

P.K. Chattopadhyay is a Project Consultant at Niir Project Consultancy Services with more than 34 years of experience in industrial project consultancy. He specialises in identifying and developing opportunities across industries, project feasibility, market trends and emerging sectors, and guides startups and aspiring entrepreneurs.

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