Newsworthy

Paper, Mergers & Acquisitions

Smurfit Kappa, WestRock merger takes effect

The merger between two major paper and packaging industry players, Dublin-based Smurfit Kappa and Atlanta-based WestRock, officially has taken effect as the newly formed company—Smurfit Westrock—debuted on the New York and London stock exchanges July 8.

The merger first was announced in September 2023 and, less than a year later, the companies have combined to create an industry giant after WestRock shareholders approved the $11.2 billion deal in a mid-June preliminary vote.

The combined company now operates in 40 countries with more than 100,000 employees, providing a “unique and unrivaled” ability to give its customers “the most diverse, innovative and sustainable” range of renewable and recyclable packaging.

“Combining Smurfit Kappa and WestRock creates a world-leading sustainable packaging player, bringing together a tremendous depth of experience and expertise from both companies,” Smurfit Westrock CEO Tony Smurfit says. “We believe this combination has created the ‘go-to’ leader and partner of choice in sustainable packaging.”

Smurfit Kappa shareholders own approximately 50.4 percent of the entity, and WestRock shareholders hold the remaining 49.6 percent.

Smurfit Westrock will be incorporated and domiciled in Ireland, with global headquarters in Dublin and North and South American operations headquartered in Atlanta. Current Smurfit Kappa Chair Irial Finan will stay on as chair of Smurfit Westrock, and Smurfit Kappa Chief Financial Officer Ken Bowles will become Smurfit WestRock CFO.

“The shareholders of both Smurfit Kappa and WestRock have overwhelmingly supported our combination,” Bowles says. “Smurfit Westrock has a unique geographic footprint, and through our industry-leading applications, an unparalleled ability to provide value for our customers.”

For the first quarter of fiscal year 2024, Smurfit Kappa Group reported $2.9 billion in revenue, while WestRock reported $4.73 billion in net sales.

Both WestRock and Smurfit Kappa are major consumers of recovered fiber. In fiscal year 2022, WestRock consumed 5.5 million tons, while Smurfit Kappa, Europe’s largest paper and packaging producer, consumed about 8.8 million tons, according to the companies’ respective sustainability reports. The merger gives Smurfit Westrock a presence in 42 countries and brings together 500 converting operations and 67 mills.

“We look forward to working with Smurfit Kappa to build a leading global platform that harnesses the strength of WestRock’s consumer portfolio, presents a truly comprehensive offering of packaging solutions for customers and delivers meaningful value to our shareholders today and into the future,” WestRock CEO David Sewell said when the merger was announced last year.

“Smurfit Kappa shares our deep commitment to innovation across the packaging life cycle, and we are confident that Smurfit WestRock will continue to lead the industry forward. I’m grateful to WestRock’s team members, whose hard work has made this combination possible, and excited for the many opportunities that will arise from becoming part of the partner of choice in our industry.”

Metals

Rio Tinto to install carbon-free smelting tech in Canada

Global mining and metals company Rio Tinto has revealed plans to install carbon-free aluminum smelting cells at its Arvida smelter in Québec, making use of the first technology license issued by Elysis, its joint venture with Pittsburgh-based aluminum producer Alcoa.

Rio Tinto, which has headquarters in London and Melbourne, Australia, will design, engineer and build a demonstration plant equipped with 10 pots operating at 100 kiloamperes—a similar size to those operating at smaller-scale commercial smelters, Alcoa says—and the plant will be owned by a new joint venture in which Rio Tinto and the Québec government, through Investissement Québec, will invest $179 million and $106 million, respectively, as equity partners.

“This investment will further strengthen [our] industry-leading position in low-carbon, responsible aluminum in North America with our hydro-powered smelters and our recycling capacity,” Rio Tinto Aluminum Chief Executive Jérôme Pécresse says. “Becoming the first to deploy the Elysis ... technology is the next step in our strategy to decarbonize and grow our Canadian aluminum operations.”

The new facility will use the same technology Rio Tinto says has been successfully demonstrated at the Elysis Industrial Research and Development Center in Saguenay-Lac-St-Jean, Québec, adding that the pilot operation will be a “critical step” in its journey toward full-scale industrialization of Elysis technology.

Rio Tinto and Alcoa announced the Elysis process in 2018 and, at the time, said it was a “revolutionary process” to make aluminum that produces oxygen and eliminates all direct greenhouse gas (GHG) emissions from traditional smelting.

As previously reported by Recycling Today, the zero-carbon concept is based on using a substitute for the carbon blocks used to separate aluminum chemically.

The new demonstration plant reportedly will have the capacity to produce up to 2,500 metric tons of commercial quality aluminum per year without direct GHG emissions, with first production aimed for 2027. The site will be located adjacent to the existing Arvida smelter, allowing the use of the current alumina supply and casting facilities.

“Elysis is a truly disruptive technology for the industry and it’s thanks to Québec expertise that we are the first in the world to produce GHG-free aluminum,” says Pierre Fitzgibbon, Québec minister of economy, innovation and energy, minister for regional economic development and minister for the metropolis and the Montreal region. “This is a technological innovation with unprecedented benefits for our aluminum sector, which remains an undisputed world leader.”

To support the industrial demonstration, Alcoa will manufacture the Elysis anodes and cathodes at the Alcoa Technical Center near Pittsburgh, which includes installing and operating new equipment. The company anticipates benefiting from the learnings of this demonstration phase and expects to apply them to future phases in Elysis development.

Alcoa will have the option to purchase up to 40 percent of the aluminum produced over the first four years at the Arvida demonstration plant through an offtake agreement, which the company says will allow its customers to benefit from the Elysis carbon-free electrolytic process early in the technology development cycle.

“Since inventing the aluminum smelting process in 1886, which is still in use today, Alcoa has continued to create transformational technologies to improve our industry,” Alcoa President and CEO William F. Oplinger says.

“Aluminum plays a critical role in the world’s energy transition and decarbonization efforts; with the Elysis technology, the smelting of this important metal can also be done without direct carbon emissions.”

Plastics

MIT research supports national bottle deposit program

The U.S. recycling rate for polyethylene terephthalate (PET) bottles was 29 percent in 2022, down slightly from 30.3 percent in 2021, according to the 2022 PET Recycling Report from the National Association for PET Container Resources (NAPCOR), Middleton, Wisconsin. But a study by MIT researchers indicates a nationwide bottle deposit program could increase that rate to 82 percent, with nearly two-thirds of all PET bottles being recycled into new bottles at a net cost of a penny per bottle when demand is robust.

Additionally, the researchers say, policies would be needed to ensure sufficient demand for recycled PET.

The findings have been published in a paper titled “Evaluating strategies to increase PET bottle in the United States” in the Journal of Industrial Ecology by Elsa Olivetti, MIT professor of materials science and engineering; graduate students Basuhi Ravi and Karan Bhuwalka; and research scientist Richard Roth.

According to the authors’ analysis, a nationwide bottle deposit policy with a 10-cent deposit per bottle could achieve the levels of recycling that have been mandated by proposed legislation and corporate commitments, however they found it is important to consider the needs of existing material recovery facilities (MRFs), which will lose revenue from PET bottles, which are a relatively high-value product compared with other materials in the recycling stream.

Olivetti tells MIT News a federal program is not necessary as implementation could be left to the individual states.

The authors say policies should focus on the whole cycle of supply and demand and the players involved. Safeguards such as subsidies funded by fees on bottle producers also would be needed to protect MRFs from revenues lost as a result of bottle deposits. Other policies could include recycled-content requirements and extended producer responsibility regulations.

Metals, Mergers & Acquisitions

Cleveland-Cliffs to acquire Stelco in $2.5B deal

Cleveland-Cliffs Inc. has agreed to acquire Stelco Holdings Inc., a Hamilton, Ontario-based blast furnace/basic oxygen furnace steel producer, in a deal valued at approximately $2.5 billion.

The Cleveland-based steelmaking and mining firm, which thus far has been denied in its effort to acquire United States Steel Corp., has instead arranged to buy assets that once operated as U.S. Steel Canada.

Cliffs says the acquisition confirms its “commitment and leadership” in integrated steel production in North America and brings an additional 1,800 United Steelworkers (USW) employees into its workforce.

Stelco is an integrated steelmaker with two operational sites in Ontario: Lake Erie Works in Nanticoke, its newest and lowest-cost integrated facility in North America, and Hamilton Works, a downstream finishing and coke-making facility.

The company ships about 2.6 million net tons of flat-rolled steel annually, primarily as hot-rolled steel to its service center customers.

For Cliffs, the majority of its assets are in the U.S., with its previous toehold in Canada including seven tooling and stamping plants and the former Zalev Bros. scrap processing facility that came with its acquisition of Detroit-based metals recycling firm Ferrous Processing & Trading (FPT) in 2021.

Stelco Holdings and equity funds affiliated with CEO Alan Kestenbaum have owned the Stelco assets since 2017, when the Canadian metals industry financier purchased the mills from a bankruptcy trustee after U.S. Steel had placed the assets into receivership.

Stelco also has publicly traded shares on the Toronto Stock Exchange, rendering the agreement subject to shareholder approval, and is expected to continue operations as a wholly owned subsidiary, including by retaining an office presence in Hamilton.

The companies say the deal has been structured to provide considerations toward Canada that include maintaining the Stelco name and presence in Hamilton, committing to investments of about $44 million in operations, ensuring existing local supplier arrangements are maintained and maintaining ties with local sports franchises the Hamilton Tiger-Cats football team and the Forge FC soccer club.

Paper

US recovered paper exports decline again

The U.S. recovered paper export market has been on a downturn since last year, and the latest data reveal that decline has continued through the first four months of 2024, with some of the top 10 importers decreasing their purchases by up to 50 percent.

According to data from the U.S. Census Bureau, International Trade Commission and the Washington-based Recycled Materials Association (ReMA), U.S. exports of recovered paper were down 15 percent from January to April, coming in at slightly more than 4 million metric tons, while the value of those exports was down nearly 12 percent to about $808 million compared with the same period in 2023.

The top 10 countries importing recovered paper from the U.S. include India, Thailand, Mexico, Malaysia, Vietnam, Canada, South Korea, China, Taiwan and Indonesia. Those countries accounted for 3.8 million metric tons of the 4 million metric tons exported from the U.S. from January to April.

India was the largest importer during the January-April period, bringing in 689,781 metric tons, down 27.1 percent from the same period in 2023, when India imported 946,143 metric tons.

Of the top 10 countries, Malaysia and Canada are the only two to increase their imports of U.S. recovered paper—both with substantial increases, too.

Malaysia increased its imports 81 percent, taking in 595,669 metric tons compared with the 329,860 metric tons purchased during the same period last year, while Canada increased its imports 45.4 percent, taking in 335,303 metric tons compared with 230,586 metric tons.

The remaining top buyers include:

• Thailand, 685,867 (-21 percent);
• Mexico, 607,537 (-9 percent);
• Vietnam, 372,882 (-26 percent);
• South Korea, 175,095 (-27.1 percent);
• China, 159,931 (-38.1 percent);
• Taiwan, 135,781 (-51 percent); and
• Indonesia, 87,226 (-37 percent).

The rest of the world imported 38.2 percent fewer tons of U.S. recovered paper from January to April compared with last year, taking in 161,300 metric tons versus 260,852 metric tons.

It remains to be seen how the second half of the year will play out in the export market, but the current trend does not inspire much confidence as U.S. recovered paper exports have been down every year since 2021. That year, the U.S. exported 16.7 million metric tons of recovered paper compared with 13.1 million metric tons in 2023.