Metals

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Cleveland-Cliffs purchases scrap company FPT

Ohio-based integrated steelmaker Cleveland-Cliffs Inc. entered into a definitive agreement to acquire Detroit-based Ferrous Processing & Trading Co. (FPT) for approximately $775 million in early October. The deal closed in mid-November.

Cleveland-Cliffs describes FPT as “among the largest processors and distributors of prime ferrous scrap in the United States, representing approximately 15 percent of the domestic merchant prime scrap market.”

In recent Recycling Today lists, FPT has ranked as the ninth-largest overall ferrous scrap processing company in North America and also the ninth-largest nonferrous scrap processing firm that also operates shredding plants. The company has auto shredding locations in Florida, Michigan, Ohio and Ontario.

FPT processes approximately 3 million tons of scrap per year, approximately half of which is prime grade ferrous scrap, according to Cleveland-Cliffs.

FPT operates 22 scrap processing facilities, with about 90 percent of revenue originating from its Midwest locations, primarily in Michigan and Ohio. In the trailing 12 months ended Aug. 31, FPT generated earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately $100 million, the Cleveland-based steel producer and iron ore mining firm says.

“FPT already enjoys an outsized position in automotive and industrial scrap, which is expected to grow as part of Cleveland-Cliffs,” according to the company.

“Cleveland-Cliffs is entering the scrap business as a major player through the acquisition of a large scrap company,” states Lourenco Goncalves, Cleveland-Cliffs chair, president and CEO. “Even more importantly, FPT has a very meaningful presence in prime scrap. With all the new flat-rolled EAF (electric arc furnace) capacity coming online in our market over the next four years, prime scrap will only become more and more scarce.”

Goncalves continues, “As the largest supplier of flat-rolled steel in North America, Cleveland-Cliffs is the main source of the steel that generates prime scrap in manufacturing facilities. Furthermore, throughout our entire footprint, Cleveland-Cliffs also consumes a very significant amount of scrap in our EAFs and BOFs (basic oxygen furnaces).”

Regarding the strategic aspects of the purchase, he adds, “The acquisition of FPT will enhance our ability to buy back prime scrap directly from our clients, cutting the middlemen and improving the margin contribution from scrap for both Cleveland-Cliffs and for the manufacturing and service center clients that will be able to sell scrap directly back to us.”

Cleveland-Cliffs says the purchase of FPT also:

• allows Cliffs to optimize productivity at its existing EAFs and BOFs as the company has no current plans to add steelmaking capacity;
• expands the company’s portfolio of high-quality ferrous raw materials to include iron ore pellets, direct-reduced iron and now prime scrap;
• immediately secures substantial access to prime scrap, where demand is expected to grow dramatically with limited to no growth in corresponding supply;
• creates a platform for Cliffs to leverage its long-standing flat-rolled automotive and other customer relationships into recycling partnerships to grow the company’s prime scrap presence; and
• furthers the company’s commitment to environmentally friendly, low-carbon intensity steelmaking with a cleaner materials mix.

Cleveland-Cliffs says the final necessary regulatory clearances in connection with the transaction were obtained Nov. 17, marking the close of the purchase. FPT is now a wholly owned subsidiary of Cleveland-Cliffs.

Goncalves says the company plans to remain “focused on amplifying the value of what we believe is the next precious metal.”

SA Recycling plans to buy PSC Metals operations

Icahn Enterprises L.P. (IEP), Sunny Isles Beach, Florida, has announced plans to sell 100 percent of its interests in Mayfield Heights, Ohio-based PSC Metals LLC to Orange, California-based SA Recycling LLC for about $290 million. PSC operates scrap metal processing facilities in Alabama, Georgia, Illinois, Indiana, Kentucky, Missouri, Ohio and Pennsylvania.

IEP says PSC Metals had a value of $141 million on its balance sheet as of June 30.

According to a news release issued by IEP, the transaction is expected to close by the end of this year.

“Icahn Enterprises acquired its interest in PSC Metals in 2007,” says Carl Icahn, chairman of IEP. “Even under challenging circumstances created by volatile commodity markets over the past several years, we executed our activist playbook with this investment, significantly increasing EBITDA (earnings before interest, taxes, depreciation and amortization). Given the cyclical nature of the company’s industry, we believe today’s transaction is appropriately timed and provides a very positive outcome for IEP unitholders.”

IEP says it plans to retain ownership of a parcel of land previously owned by PSC Metals near downtown Nashville, Tennessee. According to the company, it will lease that land to SA Recycling in connection with the transaction.

In late October when the transaction was announced, a representative from SA Recycling told Recycling Today the company did not want to provide additional comments regarding the acquisition.

SA Recycling has made a number of acquisitions in the last year, including Southern Recycling LLC, with locations in Nashville, Tennessee, and Bowling Green and Owensboro, Kentucky, and Atlanta-based Pirkle Inc.

Photo courtesy of Novelis

Novelis to invest in New York plant

Atlanta-based aluminum producer Novelis Inc. plans to invest approximately $130 million to upgrade its operations in Oswego, New York. The company cites “growing customer demand for sustainable, aluminum flat-rolled products” as a reason for the investment.

“This investment further strengthens the plant’s position for additional recycled aluminum inputs and increased recycled content across its product lines in the future,” Novelis states.

The company says the project allows it to increase hot mill capacity by 124,000 metric tons at the plant, which serves the beverage can, automotive and specialty products markets.

Part of the investment also will go into “enhancing finishing capabilities for automotive sheet,” Novelis says.

The company says construction on the project will begin in the spring of 2022, with work expected to be completed in 2024. 

The project includes upgrades to the plant’s hot reversing mill motors and drivetrain and hot finishing mill coolant systems and changes to its batch annealing capabilities. The project also will enhance energy efficiency at the plant, Novelis says.

“By investing in modern, energy-efficient upgrades in Oswego, we aim to sustain and grow important partnerships with our valued customers,” says Tom Boney, president of Novelis North America. “These upgrades also strengthen Novelis’ ability to thrive in Oswego as a great place to work and a partner to the community,” he says.

Previous upgrades at the Oswego plant include a 2015 expansion of the recycling center, which processes roughly 12,500 tons of automotive aluminum scrap every month.

Novelis also announced that it is investing $375 million to expand its rolling and recycling capabilities at its plant in Zhenjiang, China.