Project510
My first instinct is to simply use interior flocking, but I dont think i will get the same clumpy kind of look. The flocking will be very flat and even like carpet.
At 1/64, flocking might be perfect.
As a nitpick, it's not insulation per se, but fireproofing (which protects the steel by insulating it from flmes). The actual material, at arm's reach length range looks like paper maché. It's a sprayed-on paste that used to use asbestos fibers, but nor more typiclly detures perlite particles. In the industry, we've moved away from the sprayed coatings and have adopted "non tumescent paint" which is an epoxy product shot on in layers and meant to bubble up if in a fire.
Now, if the scale were larger, say, 1/24, I'd think using thinned white glue and one od the fine grain cellulose ground work plasters would be the trick. It would be fibrous and glumpy, and close to spot on.
At 1/32 or 1/35, I'd be more inclined to thinned white glue and some sort of grit sprinkled over. Perhaps cork board run over a fine rasp.
At 1/64 the granules would be so fine they would need exageration--within reason. Say, a heavy coat of paint, perhaps brushed on, then apply grit made by grinding chalk pastel over a coarse rasp.
Bears thinking about.
The other tricky finish will be the epoxy floor coating on the concrete. It's a medium gloss, but will hve some discoloring from use.