A top industry official told The Financial Express that the downstream producers will base their case to the finance ministry on the argument that modern scrap recycling methods are environmentally benign and require an investment of only $500 per tonne of installed capacity against the $5,000 per tonne required for a primary metal producing facility.

There is also a suggestion for introducing a minimum scrap price mechanism to check cheaper imports of aluminium scrap in the light of under-invoicing fears and to negate the fact that increased import of scrap was a threat to primary producers.

Imported aluminium scrap--which isgraded--comes at $1,210-$1,230 a tonne, or slightly lower than aluminium ingots ($1,300 a tonne). However, aluminium scrap forms just around 3 per cent of the total aluminium imports of around 1,400 tonnes per month. So alumina smelters have no reason to fear that their investments will be jeopardised by scrap imports, the official said.

The government lowered the import duty on scrap from 31.7 per cent to 21.15 per cent in July this year. However, the effective reduction was only 3.8 per cent if compared to the 25 per cent which prevailed in 1997-98.

A market observer said scrap is imported in a crumpled, baled and briquetted form and there was no chance of it being sheared into small pieces and passed off as ingots to take advantage of the lower duties.

Industry analysts said the aluminium industry could have made a saving of almost Rs 250 crore from a lower import duty on scrap for recycling purposes from a 25,000 tonne per annum unit.

The scale of a modern aluminium scrap recycling plant is about25,000 tonnes per annum and upwards, whereas the minimum scale for modern aluminium smelters is 2,40,000 tonnes per annum.

The scrap import lobby says domestic scrap is not segregated and suitable for recycling. On the other hand, primary metal producers have a good demand from manufactures of sheets (150,000 tonnes per annum) and extrusions (85,000 tonnes per annum).

Most countries of the world have witnessed a tremendous upsurge in recycled aluminium. The recycled metal accounts for 41 per cent of total aluminium consumption in Italy and 30 per cent in Japan. In the UK and Germany, recycled aluminium accounts for 25 per cent. Furthermore, 35 per cent of the world's consumption of aluminium comes from recycled or reclaimed metal.