Tipping the Scales

Nonferrous scrap flows into the processing and trading stream in a wide variety of ways, creating an industry sector with numerous niche opportunities.

Even with the diverse nature of nonferrous scrap, many companies have been able to build up sizable processing capacity, allowing them to emerge as large-scale processors of aluminum, copper, brass and other types of nonferrous metals.

Throughout the past two decades, auto shredding plants have grown in importance in the overall nonferrous sector, as high-volume scrap processing companies introduce more material into their shredders and invest more effort (and money) into extracting as much nonferrous metal as possible from their shredding streams.

SHREDDING THROUGH IT

The companies appearing on the list of largest nonferrous scrap recyclers in North America have adopted a range of philosophies when it comes to how they configure their processing capacity to handle the scrap they obtain. (To view a pdf of the Top 20 List, click here.)

One of the large scrap companies that has made a major commitment to shredding capacity is the David J. Joseph Co. (DJJ), Cincinnati, now owned by steelmaker Nucor Corp., Charlotte, N.C.

In 2009, DJJ’s numerous shredding plants produced 100,000 tons of the Zorba nonferrous post-shredder grade of scrap. The figure is larger than the 92,000 tons of aluminum scrap that it processed or the 25,000 tons of red metal scrap.

On its Web site, DJJ says it now operates 14 auto shredders. These are split between several regional subsidiaries operating under different names (such as Trademark Metals Recycling LLC in Florida and River Metals Recycling LLC in Kentucky), but the common denominator is that all of the plants churn out a considerable stream of processed ferrous and nonferrous scrap.

As global demand and pricing for nonferrous metals have trended upward in the past 10 years, many operators have invested heavily in downstream equipment designed to extract as much nonferrous metal as possible.

Some of the newest sorting and separating machines concentrate on removing small pieces of metal, and yet shredder operators generally find that these small fragments begin to add up to tons of nonferrous scrap commodities.

Milwaukee-based Miller Compressing Co. is a large regional recycler that operates two auto shredding plants.

The company buys, processes and sells a wide variety of ferrous and nonferrous scrap. Its considerable production of zorba in 2009 helps demonstrate that its shredding capacity is an important part of its business. Last year, the company says it processed 45,000 tons of aluminum scrap, 15,000 tons of red metal scrap and 35,000 tons of zorba.

The high percentage of zorba could reflect an economy in which end-of-life vehicles and appliances flowed in at a higher rate than aluminum or copper scrap generated at factories or demolition and construction sites.

Even if that is the case, it serves to demonstrate that shredding plants with effective downstream systems have become an important way for processors to retain and build their presence in the nonferrous scrap markets.

Other nonferrous scrap processors on the list maintain high-volume businesses without deep involvement in the shredded grades. For the overall size of its company, the seven shredders operated by Commercial Metals Co. (CMC), Irving, Texas, means the company does not shred as high of an overall percentage of its scrap as other companies on the list.

In 2009, the company processed and shipped far more aluminum and red metal scrap than it did post-shredder zorba: 102,000 tons of aluminum, 72,500 tons of red metals and 21,000 tons of zorba.

That’s not to say CMC is devoid of shredding and downstream separation operations. On its Web site, it notes, “Modern shredding and material separation technologies maximize the value of each commodity we process.”

PUBLIC AND PRIVATE

Both publicly traded and privately held firms are well-represented among the 20 companies appearing on the 2009 list. A few companies can still be considered regional, but a larger number that are national or global in their scope.

Four of the 10 largest nonferrous processing firms are also in the steelmaking business, with all four of those firms being publicly traded.

CMC and Schnitzer Steel Industries have long been involved in both steelmaking and scrap proce

ssing. More recently, Nucor Corp. and Steel Dynamics Inc. (SDI), Fort Wayne, Ind., purchased the scrap operations that have caused their companies to be heavily represented in the nonferrous scrap processing sector.

Nucor’s purchase of DJJ provided it with more than a dozen shredder yards and a number of facilities that have traditionally bought and processed nonferrous scrap. Similarly, the SDI purchase of OmniSource Corp. provided it with ownership of more than 10 shredder yards and many other locations that purchase and process nonferrous scrap.

 Also publicly traded is Sims Metal Management, Chicago, a company focusing on scrap processing and trading without a steelmaking presence.

The remaining 15 companies are privately held scrap processing and trading firms with varying geographic business models. PSC Metals, Mayfield Heights, Ohio, which was formerly publicly traded, retains locations in several states as well as in Canada.

While companies such as U.K.-based EMR Ltd.; Alter Trading, St. Louis; and Liberty Iron & Metal, Phoenix, have operations in multiple states (or in EMR’s case in multiple nations), companies such as Miller Compressing, Milwaukee, or Alpert & Alpert, Los Angeles, remain focused on a home region.

Several of the regional companies have grown outward to gain a presence in a wider geographic circle, such as Middletown, Ohio-based Cohen Brothers moving beyond Ohio into Indiana and Kentucky. Similarly, the growth of Rockford, Ill.-based Behr Iron & Steel has moved it beyond Illinois into Iowa and Indiana, and Oklahoma-based Yaffe Cos. has expanded into the neighboring states of Arkansas, Kansas and Missouri.

Global Recycling Inc. has grown from being a trading firm into also running two processing locations, one in Charlotte, N.C., and one in Little Rock, Ark.

Both Miller Compressing Co. and Newell Recycling LLC, Atlanta, have added locations as they have grown, but each has thus far remained in their home states of Wisconsin and Georgia, respectively. The Chicago metropolitan area has provided enough nonferrous scrap infeed for Universal Scrap Metals Inc. to process considerable volumes at its two Chicago area locations.

Of the two Canada-based companies on the list, Ontario-based Triple M Metal has concentrated its processing operations in Ontario (though it has trading offices in Montreal and New Jersey), while Montreal-based American Iron & Metal has processing facilities in Ohio and Manitoba as well as Quebec.

Company strategy or opportunities that may have arisen suddenly also have caused companies to grow regionally, but perhaps in more than one region at a time. OmniSource, Fort Wayne, Ind., has its roots in the western Great Lakes region, but its purchase of the former Carolinas Recycling Group has provided it with a prominent footprint in the Southeast.

Similarly, while Ferrous Processing & Trading (FPT, whose SLC Recycling, Warren, Mich., division makes the list) and Alter Trading have their roots in the Midwest, each company has established a foothold in the Southeast—FPT in Florida and Alter in Alabama.

The paths to higher tonnage for the 20 firms on the list are numerous, with differences in shredding capacity, geographic range and willingness to make acquisitions varying greatly.

As of early 2010, the companies on the list find themselves in a good position to acquire and process healthy amounts of nonferrous scrap that are in demand by the world’s metals producers.

The author is the editor-in-chief of Recycling Today and can be contacted via e-mail at btaylor@gie.net.