Understanding Scrap Metal Laws in NSW

Scrap metal plays a significant role in New South Wales’ recycling economy, providing valuable resources for manufacturing and reducing waste across various industries. However, due to the high value of certain metals—like copper, aluminium, and brass—the scrap metal industry has also become a target for theft and illegal activity. To address these challenges, the NSW Government introduced a strong regulatory framework through the Scrap Metal Industry Act 2016 and associated regulations.

Whether you’re a licensed scrap metal dealer, a mobile operator, or simply an individual selling leftover materials from a construction project or renovation, it’s essential to understand the legal obligations that govern the industry. From mandatory dealer registration to strict bans on cash transactions, the laws are designed to promote transparency, accountability, and safety in every scrap metal transaction.

This blog provides a detailed overview of the current scrap metal laws in NSW. It explains the legal framework, outlines the responsibilities of dealers and sellers, and highlights recent changes and enforcement measures. Whether you are just starting out in the industry or need to update your compliance practices, this guide will help you stay on the right side of the law and contribute to a more secure and sustainable scrap metal sector.

1. Legal Framework: Scrap Metal Industry Act 2016 & Regulations

In New South Wales, the buying, selling, and handling of scrap metal is governed primarily by:

• Scrap Metal Industry Act 2016 
• Scrap Metal Industry Regulation 2016 (as amended) 

This legislation was introduced to combat metal theft, promote transparency, and ensure environmental and safety standards are met in the scrap metal industry. It defines key responsibilities for scrap metal dealers and establishes compliance requirements for anyone involved in the scrap trade.

The Act applies to any person or business that carries on the business of acquiring scrap metal, including individual operators, mobile collectors, and large recycling enterprises.

Key features of the Act include:

• Mandatory registration for dealers 
• Prohibition of cash payments for scrap metal 
• Stringent record-keeping requirements 
• Reporting obligations for suspicious or stolen material 
• Enforcement powers for the NSW Police 

2. Obligations for Scrap Metal Dealers

2.1 Registration Requirements

Anyone operating as a scrap metal dealer in NSW must register with the NSW Police. This includes fixed yard operators, mobile collectors, and any business involved in buying or selling scrap metal.

Registration includes submitting:

• Business details (name, ABN, contact info) 
• Addresses of premises or locations 
• Vehicle registration numbers (if mobile operations apply) 
• Relevant licenses (such as a motor dealer or tow-truck license) 

A certificate of registration is issued upon approval. This certificate must be visibly displayed at the place of business or produced on request by an authorised officer.

Registration must be renewed every three years, and any changes to business details must be reported within 14 days.

2.2 No-Cash Transactions Rule

The Act strictly prohibits cash payments for scrap metal. This includes cash, cash cheques, money orders, and barter.

All payments for scrap metal must be made using traceable methods such as:

• Electronic funds transfer (EFT) 
• Direct deposit into a bank account 
• Cheques that cannot be cashed 

The goal is to ensure there is an audit trail for every transaction, reducing the appeal of the scrap metal industry to criminals.

Advertising cash payments or offering “cash for scrap” services is also illegal. Breaches can lead to fines and suspension of the dealer’s registration.

2.3 Record-Keeping Obligations

Dealers must keep detailed records of every transaction involving scrap metal for at least three years. These records must include:

• Full name and address of the seller 
• Date and time of the transaction 
• Description of the metal (type, quantity, weight) 
• Price paid and method of payment 
• Proof of identity of the seller (such as driver’s licence or passport) 
• Registration details of any vehicles used to deliver the scrap 

All records must be accurate and accessible for inspection by authorised officers. Failing to keep records or keeping false/misleading records is a criminal offence.

2.4 Reporting Suspicious Transactions

Dealers must immediately notify police if they suspect that any metal may be stolen or unlawfully obtained. This includes metal that appears suspicious due to its nature, quantity, or the circumstances of the sale.

Examples of suspicious materials may include:

• Unusually large amounts of copper wiring or roofing materials 
• Items with identifying marks removed 
• Items consistent with recent local thefts (e.g. stolen street signs, cables) 

Failure to report suspected stolen material may result in serious penalties.

3. Individuals and Industry Sellers

3.1 Do Individuals Need to Register?

Private individuals or small-scale sellers are not required to register as scrap metal dealers unless they are conducting scrap transactions as a business or on a regular commercial basis.

However, when selling scrap metal to a registered dealer, individual sellers must:

• Provide valid identification (driver’s licence, passport, etc.) 
• Provide accurate information about the source of the metal (ownership proof may be requested) 
• Accept payment only via traceable, non-cash methods 

3.2 Advice for Sellers

If you’re an individual or small business planning to sell scrap metal (e.g. leftover construction materials, old appliances, vehicles), keep the following in mind:

• Always use a registered scrap metal dealer 
• Bring identification and be ready to answer questions about the source of the material 
• Get a receipt for every transaction 
• Keep your own records for personal tracking and legal protection 

4. Enforcement and Penalties

The Scrap Metal Industry Act provides significant enforcement powers to the NSW Police, including:

• Conducting inspections of registered businesses 
• Issuing closure orders for non-compliant operations 
• Seizing records and evidence of criminal activity 
• Suspending or cancelling a dealer’s registration for serious or repeated breaches 

Penalties for breaches include:

• Up to 100 penalty units (approximately $11,000) for accepting cash payments 
• Fines for failing to register or update registration details 
• Criminal charges for falsifying records or dealing in stolen metal 

The Act allows for both immediate penalties and long-term sanctions such as de-registration.

5. Recent Changes (Effective from 1 September 2024)

Recent amendments to the regulations strengthened compliance measures. Notable changes include:

• Expansion of the definition of scrap metal dealer to include mobile operators and temporary collection services 
• Clarified requirements around what constitutes sufficient identification and record-keeping 
• Increased monitoring and public reporting of registered dealers with compliance issues 
• Tighter rules around the use and display of dealer registration certificates 

These updates reflect the NSW Government’s commitment to combating metal theft and improving the integrity of the scrap metal supply chain.

6. Environmental and Local Compliance

In addition to state-level legislation, scrap metal dealers must also comply with environmental and local government regulations. These may include:

• Waste management requirements 
• Environmental Protection Licences for processing hazardous materials 
• Compliance with zoning and land use rules from local councils 
• Safe storage of batteries, fuel tanks, and lead-based materials 

Non-compliance with environmental rules can result in separate enforcement action from the NSW Environment Protection Authority (EPA) and local councils.

7. Selling Scrap Metal in NSW: Step-by-Step Guide

Whether you’re a business clearing out old equipment or an individual with unwanted metal goods, here’s how to legally sell scrap metal in NSW:

1. Find a registered dealer – Ensure the buyer is officially registered with NSW Police. 
2. Prepare your ID – Bring your driver’s licence, passport, or another valid photo ID. 
3. Sort and label materials – Separate ferrous and non-ferrous metals, label where necessary. 
4. Provide ownership information – Be prepared to explain where the metal came from. 
5. Receive traceable payment – Accept EFT or cheque only. 
6. Request a receipt – A detailed transaction record protects both parties. 

8. Why These Laws Matter

The Scrap Metal Industry Act exists to:

• Deter theft of copper, aluminium, and other valuable metals 
• Create a transparent and auditable industry 
• Ensure that businesses act responsibly and ethically 
• Protect consumers and public infrastructure from damage 

Unregulated scrap transactions can facilitate crimes, increase insurance premiums, and damage public trust. These laws ensure fairness and integrity in the industry.

9. Looking Ahead

The NSW Government continues to review and refine scrap metal regulations in response to community feedback and enforcement data. Possible future reforms may include:

• Stronger requirements around ID verification 
• New technological systems for real-time transaction reporting 
• Stricter environmental licensing for processing facilities 
• Expansion of the public registry of compliant and non-compliant dealers 

Dealers and sellers should remain informed about legislative updates and seek legal advice where needed.

Final Thoughts

The scrap metal trade in NSW is a regulated industry designed to protect both public and private interests. Whether you’re a large-scale recycler or a private seller with a load of old steel, it’s essential to understand your rights and responsibilities.

By staying compliant, keeping accurate records, and only dealing with licensed operators, all parties can benefit from a safe, fair, and profitable scrap metal industry.