Scrap Industry News

CARRIERS SEEK STB APPROVAL FOR CONRAIL DIVISION

CSX Corp., Richmond, Va., and Norfolk Southern Corp., Norfolk, Va., formally asked the Surface Transportation Board late last month to approve their acquisition of Conrail Inc. The proposed transaction would reshape the eastern rail system and restore competition to the largest market in the Northeast for the first time in more than two decades, according to the companies. The STB will take no more than 350 days to consider the application.

The two carriers filed an eight-volume application detailing nearly $1 billion in public benefits from the merger. The 15,000-page application lists dozens of service and infrastructure improvements that they say will deliver more reliable and efficient service to thousands of customers.

In presenting the case for this far-reaching railroad restructuring, the companies said they will spend a combined $1.2 billion for capital improvements. The money will be spent over three years for such things as track improvements, added capacity, new or expanded freight terminals, clearance projects, and new automobile distribution centers.

The two carriers announced April 8 that they had reached an agreement to acquire Conrail and operate its routes and assets in a $10 billion transaction, with Norfolk Southern getting 58 percent and CSX 42 percent.

Under the restructuring, CSX will operate more than 23,000 route miles in 23 states and Norfolk Southern more than 21,000 miles in 22 states.

In addition, the two carriers have created a jointly controlled company, which has been merged with and into Conrail Inc. Pursuant to the merger, all Conrail shares not owned by CSX, Norfolk Southern, Conrail or their respective affiliates were converted into the right to receive $115 cash per share, and the remaining Conrail shares were cancelled. Following the merger, CSX and Norfolk Southern indirectly own all the shares of the surviving corporation (named Conrail Inc.) which will be held in a joint voting trust pending federal regulatory approval.

NORTH STAR OPENS NEW SCRAP YARD

North Star Recycling, Minneapolis, the raw materials procurement subsidiary of North Star Steel, has opened a scrap transfer yard in Blue Island, Ill. Blue Island is a southern suburb of Chicago.

The transfer facility will operate under a multi-year lease, according to Rex McCreight, Midwest regional manager for North Star Recycling. The yard will handle scrapped cars from the Chicago metropolitan area, crushing and shipping them to the North Star Steel mill in Wilton, Iowa, for melting and recycling into new steel products. In the future, depending on the volume of material handled, there may be some material sold on the open market.

North Star Recycling operates scrap yards in Tampa, Fla.; Cedar Rapids and Wilton, Iowa; Monroe, Mich.; Toledo, Ohio; and Beaumont, Texas. The company established its first scrap transfer yard last year in Des Moines, Iowa.

SVEDALA BUYS LINDEMANN

Svedala Industri, Malmo, Sweden, has reached an agreement to acquire Lindemann Maschinenfabrik GmbH, Dusseldorf, Germany. Lindemann has subsidiaries in Germany, Switzerland, Spain, England, the United States and Japan. Svedala officials cite Lindemann’s leadership in the recycling equipment field and existing market penetration in Japan as two factors leading to the acquisition.

Svedala is a worldwide manufacturer of equipment and systems for the construction and mineral processing industries and materials handling. The company’s existing environmental division will be combined with Lindemann to form Svedala Recycling. Terms of the deal were not disclosed.

RMI INKS DEAL WITH GALT ALLOYS

RMI Titanium Co., Niles, Ohio, has announced plans to invest in Galt Alloys, Inc., Canton, Ohio.

Galt is the largest domestic manufacturer of ferrotitanium and a producer and distributor of specialty alloys to ferrous and nonferrous customers. The two companies signed a letter of intent for a transaction that would result in RMI owning 90 percent of Galt’s common stock and Galt undertaking a major expansion program.

The expansion, to cost around $18 million, will include a new scrap prep facility, a plasma consolidation furnace with a 5 million pound annual capacity and a plasma hearth furnace with a 7 million pound annual capacity. The scrap preparation line is expected to be operational by the middle of next year. The consolidation furnace is expected to be operational by the end of 1998 and the hearth furnace will be operational in early 1999.

RMI currently purchases scrap preparation and hearth melting services on the open market. The investment will enable RMI to reduce its costs for these services, increase its use of lower cost scrap and increase throughput at its Niles facility. The transaction is expected to be complete by July 31 of this year.

RMI Titanium manufactures titanium mill products, hot-formed and superplastically formed parts, and also titanium powder.