The classification of metal as a raw material changes depending on its stage in the industrial supply chain. Metal exists in different forms, from extraction to recycling, and each form is treated differently in economic and manufacturing contexts. This complexity means metal is often categorized simultaneously as a primary resource, an intermediate good, and a manufacturing feedstock. Understanding these distinctions requires looking at the material’s physical state and its role in a specific production process.
Defining a Raw Material in Industry
A raw material is a basic substance that is unprocessed or only minimally processed before being used to manufacture other goods. It is often referred to as a primary commodity or feedstock, representing the initial input into industrial production. The defining characteristic is that the material has not yet been transformed into a finished consumer product. This category includes materials extracted directly from nature, such as crude oil, cotton, or iron ore.
Metal in Its Primary State: Ore
Metal ore, the rock mined directly from the earth, is a raw material. Ore contains metallic compounds mixed with unwanted material called gangue. For example, iron ore must undergo beneficiation to increase the concentration of iron. This involves minimal processing steps like crushing, grinding, and concentration techniques. The resulting product, often called concentrate, is still considered a raw material because its chemical composition has not been altered to isolate the pure metal.
Refined Metal as an Intermediate Good
Once metal concentrate is smelted and purified, it transforms from a raw material into a semi-finished product. Smelting uses heat and a chemical reducing agent to separate the metal from its ore, resulting in pure metal that is then cast into standardized shapes like ingots, billets, or sheets. Economically, these standardized shapes are known as intermediate goods because they are products of one industry intended to be used as inputs for another.
For the company that mined and smelted the ore, the refined metal ingot is their finished product. However, for the manufacturer who purchases that ingot to stamp out a car part or draw wire, the metal acts as their raw material input or feedstock. This is where the classification becomes context-dependent, as the refined metal has already undergone significant processing but is still not a final consumer product. The intermediate good designation is the most accurate description in the wider supply chain.
Secondary Raw Material: The Role of Scrap
Scrap metal, consisting of post-consumer waste or industrial offcuts, introduces the concept of a circular economy. Although scrap is not a virgin resource extracted from the earth, it functions identically to a primary input for recycling facilities. For this reason, it is classified as a “secondary raw material.”
Recycling facilities use scrap metal as the primary feedstock for producing new metals, a process that requires significantly less energy than refining ore. For instance, creating new aluminum from scrap uses approximately 95% less energy than producing it from bauxite ore. The use of secondary raw materials conserves natural resources and reduces the environmental impact of manufacturing. By injecting recovered metal back into the supply chain, scrap ensures that metal remains a perpetually available production input.