BlueScope enters scrap business in Midwest

Australia-based steelmaker BlueScope has announced it has entered into a binding agreement to buy the ferrous scrap steel recycling business of Waterloo, Indiana-based MetalX LLC. BlueScope describes that firm as “the leading supplier of scrap feed” to its Delta, Ohio, electric arc furnace (EAF) steel minimill, North Star BlueScope Steel.

BlueScope says it will pay $240 million to acquire two of MetalX’s operating sites, one each in Indiana and Ohio. The site in Ohio is “immediately adjacent to the North Star facility” in Delta, according to BlueScope.

The steelmaker says the transaction is “on a cash-free and debt-free basis and includes working capital,” with the acquisition expected to be completed by end of this year.

Members of the Rifkin family started MetalX in 2012, a few years after selling their former company, OmniSource Corp., to Indiana-based EAF steelmaker Steel Dynamics Inc.

The company subsequently has installed auto shredders in Waterloo, Indiana, and in Delta. The firm has additional sites in Auburn and Fort Wayne, Indiana.

“The United States is a key focus for BlueScope’s future growth,” says the company’s managing director and CEO Mark Vassella. “The MetalX ferrous acquisition adds to BlueScope’s extensive U.S. asset footprint of over $3 billion, which spans steelmaking, steel coating and painting, engineered building systems and industrial property development. And we have current and intended expansion projects totaling up to $1.5 billion, including the NorthStar expansion project.”

Vassella’s phrasing of BlueScope acquiring ferrous-related assets makes it unclear to what extent, if any, MetalX and the Rifkin family could remain involved in nonferrous scrap processing and sales. The BlueScope announcement also indicates the steelmaker is acquiring just one of the three MetalX facilities in Indiana.

The BlueScope CEO continues, “Using our strong financial position, moving upstream to acquire a scrap supply business helps underpin North Star’s supply chain and its great competitiveness. North Star will soon move from a two million metric tons per annum mill to almost three million metric tons per annum, and as the business expands, securing scrap is the right play.”

North Star has a “diverse base of scrap steel suppliers,” Vassella adds. “MetalX is our largest, currently supplying around 20 percent of the scrap used by North Star. The acquisition brings us a crucial presence and expertise in scrap processing to further secure our scrap needs–both prime and postconsumer (obsolete) scrap. Further, the MetalX ferrous acquisition will enable North Star to improve the quality and quantity of obsolete scrap it uses and reduce the mix of prime scrap.”

He concludes, “As a steel recycling EAF producer of hot-rolled coil, utilizing low emissions electricity, North Star is highly carbon-efficient. This acquisition further enhances BlueScope’s sustainability profile by bringing in-house part of North Star’s scrap collection. The acquisition meets our return on capital expectations and provides synergies to optimize logistics and reduce scrap costs. We look forward to welcoming all of the MetalX ferrous team into the broader BlueScope team.”