Government Moves to Regulate Ghana’s Informal Scrap Metal Trade
Success requires sustained political commitment and adequate resourcing for monitoring compliance.
SEATTLE (Scrap Monster): Government is implementing a comprehensive licensing regime through the Ghana Integrated Iron and Steel Development Corporation to bring the largely informal scrap metal trade under regulation as authorities seek to curb infrastructure theft, improve data collection, and secure supplies for domestic steel producers who depend heavily on recycled materials.
The policy developed by the Ghana Integrated Iron and Steel Development Corporation (GIISDEC) has received ministerial approval and is entering implementation following months of consultations with industry players, traders, and state agencies. The trade has operated for years with minimal oversight despite its central role in feeding local smelters that produce approximately 80 percent of iron rods used domestically.
Williams Okofu Dateh, Chief Executive Officer of GIISDEC, emphasized in an interview following meetings with scrap dealers and steel firms that the sector’s unregulated nature has allowed anyone to enter the business without scrutiny regarding material sources or trading practices.
“It’s a very big industry, but nobody was really taking care of it,” Okofu Dateh stated. “Anybody can come in and start doing scrap business. Even the smelters will buy from anyone at all. Where the material comes from, nobody cares.”
Officials link this oversight gap to visible consequences including theft of public infrastructure such as drain covers and household metals, raising safety concerns and prompting calls for state intervention. The new framework is designed to formalize the sector through licensing, traceability, and inter agency enforcement involving Ghana Customs, police, and Ghana Revenue Authority (GRA).
The policy covers every aspect of scrap business operations including imports, exports, and domestic trading, with GIISDEC coordinating with trade authorities, customs officials, law enforcement, and smelters themselves. The aim is comprehensive regulation and formalization of the entire industry value chain.
Scrap metal plays a critical role in Ghana’s steel production system. About 80 percent of iron rods used domestically are manufactured locally, and that output derives largely from scrap materials according to GIISDEC estimates. Only approximately 20 percent of inputs are imported, creating heavy dependence on recycled metal supplies.
Despite this reliance, authorities acknowledge little reliable data exists on volumes, sources, or trade flows within the sector. Everything remains largely assumption based without formal tracking mechanisms to monitor who conducts business, at what volumes, and where materials ultimately flow.
“Because it is unregulated, everything is more like an assumption,” Okofu Dateh said. “Once we formalize it, we will know who is doing the business, at what volumes and where the scrap is going. Data collection and traceability are key reasons for this policy.”
Implementation will proceed in phases as regulators work out licensing requirements, eligibility criteria, and fee structures. GIISDEC is seeking buy in from larger industry players to ensure rules are workable before full rollout across the sector.
The corporation has engaged major steel producers including B5 Plus, one of Ghana’s largest users of scrap metal with production capacity exceeding 250,000 metric tonnes annually at its rolling mill. Okofu Dateh indicated discussions with firms aim to align enforcement with industry practices and secure cooperation across the supply chain.
B5 Plus requires approximately 40,000 metric tonnes of scrap monthly to sustain operations, sourcing materials partly from local collectors and partly through imports. The company transforms recycled metal and billets into wire rods, rebars, sections, angles, channels, beams, round bars, and square bars serving construction, mining, and allied industries.
Beyond scrap regulation, these talks have reopened broader questions about development challenges facing Ghana’s steel industry, which remains constrained by high power costs, weak transport infrastructure, and land access issues. GIISDEC plans to convene an industry forum later this year to discuss these obstacles and outline longer term strategy.
“Every industrialized country did it on the back of iron and steel,” Okofu Dateh said. “If we don’t develop this industry, there is no way the country can industrialize.”
The licensing regime announced in mid 2025 targets all dealers in the scrap metal value chain including collectors, aggregators, agents, and brokers. When operational, conducting scrap business without a GIISDEC issued license will become illegal, with enforcement through existing legal frameworks.
Under the licensing policy, operators across the scrap value chain including collectors, aggregates, buyers, and manufacturers would register with GIISDEC and face regulation designed to create mutual benefits for all parties. Collectors would be required to operate under depot systems to ensure traceability throughout the supply chain.
GIISDEC will direct steel companies to deal exclusively with licensed agents and brokers. Before receiving licenses, applicants must demonstrate to GIISDEC the specific role they play in the value chain to receive appropriate authorization for their business segment.
Okofu Dateh emphasized the policy aims not only to establish order within the scrap metal business but also to establish fair pricing for players throughout the value chain. Current lack of regulation means collectors accept whatever prices are offered without recourse when disputes arise.
“Because there is no law regulating the sector, the collectors of scrap metal take whatever is given to them; when they have a challenge, they do not know who to report to; they do not have a strong association,” the GIISDEC chief executive explained.
The informal nature of scrap collection has allowed some fabrication companies to exploit regulatory gaps, purchasing government electrical cables cheaply, melting them down, and converting them into roofing sheets for profit. This practice undermines public infrastructure while enabling private gain through questionable sourcing.
Theft of drain covers has become particularly visible in urban areas, creating hazards for pedestrians and vehicles while degrading public sanitation infrastructure. Stolen electrical components disrupt power distribution and telecommunications networks, imposing costs on utility companies and service disruptions on consumers.
Environmental concerns compound the regulatory challenges. Indiscriminate burning of wires to extract copper contributes to air pollution and poses health risks to nearby communities. Trucks carrying scrap often travel overloaded and unsecured, spilling sharp metal debris onto highways and endangering other road users.
The scrap sector supplies materials critical to Ghana’s construction boom, which has driven demand for steel products across residential, commercial, and infrastructure projects. Local steel manufacturers have expanded capacity significantly in recent years, yet utilization remains below potential due to competition from cheaper imports.
Ghana’s steel industry maintains total installed annual capacity exceeding one million metric tonnes, yet local annual average demand hovers around 350,000 metric tonnes because competitive imports continue meeting substantial portions of domestic requirements. This creates excess capacity of approximately 650,000 metric tonnes annually among local producers.
B5 Plus and other major manufacturers are working to identify and supply markets in West African sub regions to utilize unutilized capacity while lobbying government for protection against imports that undercut locally produced materials despite quality advantages and employment generation.
The regulatory framework aligns with GIISDEC’s broader mandate established by Act 988 in March 2019 to develop and promote an integrated iron and steel industry. The corporation focuses on formulating and implementing policies and regulations covering the entire value chain from mining iron ore and related minerals to producing finished steel for industrialization and economic growth.
GIISDEC has undertaken mineral resource estimation projects at iron ore deposits in the Oti and Northern regions, working with consultants to transform natural resources into commercially viable assets that can attract strategic investors for large scale development.
The Sheini Iron Ore Project and Gyamurume deposit represent priority initiatives where GIISDEC aims to establish domestic iron ore production that could reduce reliance on scrap metal and imported billets. However, developing these resources requires substantial capital investment and technical expertise currently being mobilized.
In the near term, scrap metal will remain the primary feedstock for Ghana’s steel industry, making effective regulation essential for ensuring reliable supplies, preventing criminal activity, and protecting revenue collection. The licensing system represents government’s attempt to balance industry growth with public interest protection.
A multi stakeholder committee is finalizing implementation modalities including specific license categories, fee schedules, compliance monitoring mechanisms, and enforcement protocols. While no firm timeline has been disclosed beyond the phased approach, GIISDEC indicates operational readiness depends on completing legal consultations and institutional preparations.
Once implemented, the regime will require all scrap metal transactions to involve licensed parties with traceable documentation. Large scale metal fabricators and machine part dealers who rely on scrap for operations may also face registration requirements to enhance oversight and ensure sold components trace to legal sources.
For steel manufacturers like B5 Plus, regulatory clarity could stabilize supply chains by reducing uncertainty about material availability and quality. Legitimate scrap collectors may benefit from fairer pricing and stronger negotiating positions backed by formal recognition and association representation.
The policy faces implementation challenges including resistance from established informal networks, enforcement capacity constraints across multiple agencies, and potential for corruption within licensing administration. Success requires sustained political commitment and adequate resourcing for monitoring compliance.
International experience suggests effective scrap regulation requires coordination across multiple government functions including trade policy, customs enforcement, tax administration, environmental protection, and industrial development. Ghana’s fragmented institutional landscape may complicate the integrated approach needed for comprehensive oversight.
GIISDEC’s engagement with industry stakeholders aims to build consensus around regulatory parameters before imposing requirements that could disrupt existing business relationships or create unintended economic consequences. The consultation process reflects recognition that top down mandates often fail without industry cooperation.
For now, the focus remains on tightening oversight of a trade that quietly underpins much of Ghana’s construction activity while bringing order to a market that has long operated in the shadows without formal accountability structures or transparent pricing mechanisms.
Courtesy: www.newsghana.com