Scrap Industry News

INARE prepares for November Convention

The Mexican Recycling Institute (Institute Nacional de Recicladores, or INARE) will be hosting the Ninth International Mexican Recycling Congress & Expo. The event will take place at the Holiday Inn Plaza Dali Hotel in Mexico City, November 15 and 16.

This year’s congress theme is “The High Tech Recycling Explosion.” A panel of industry experts will discuss issues as they relate to the recycling industry. Topics to be covered include:

• Electronics recycling

• Scrap generated at maquiladoras

• Secondary fiber recovery

• Ferrous and nonferrous scrap

• Plastics recovery challenges

• Import/export scrap risks.

Additionally, a round table of industry participants will debate “Let the Trucks Roll,” covering the topic of U.S. and Mexican transportation companies operating in each others’ markets.

INARE board member Carlos Rovelo says the current trading activity between the U.S. and Mexico is reshaping the way business works. “The storage, the processing, the distribution of raw materials is not only changing how companies do it, but when they do it,” says Rovelo. “Mexico has become a technological production hub for U.S. companies. Mexican economic projections indicate that within the decade, Mexico will become the leading U.S. trading partner, surpassing even Canada.”

According to the Mexican Automobile Association, last year, global carmakers built approximately two million vehicles in Mexican factories; 76% of the vehicles were for exports, primarily to the U.S.

Mexico’s production of autos, television sets, laptop computers and other items is generating significant amounts of scrap or recyclable material.

INARE, a trade group with more than 1,500 Mexican businesses as members, is working to encourage American and Mexican companies to regionalize their marketing strategies to prepare for the trading climate, adds Rovelo.

Those seeking more information on the November INARE Congress can contact Rovelo via e-mail at crovelo@aol.com .

More Recycling Industries Assets Sold

The assets of the former Recycling Industries Inc. continue to be purchased by scrap companies looking to increase their presence in regional markets.

Mercer Wrecking & Recycling, Trenton, N.J., arranged a deal in August to take ownership of two scrap yards previously owned by the defunct Recycling Industries’ scrap company. Mercer acquired the two yards for $3.3 million.

The two yards include the Jacobson Metal Co. facility in Chesapeake, Va., and a feeder yard in Suffolk, Va., that once operated as Peanut City Iron & Metal. According to Mario Mazza, president of Mercer, the reopened yards will have roughly 60 employees. When the deal is finalized, the scrap yards will operate under the name Bay Bridge Enterprises LLC.  The acquisitions will be the first yards for Mercer outside the New Jersey area.

In the Atlanta area, OmniSource Corp., Fort Wayne, Ind., has formed a partnership with brokerage company Jefferson Iron & Metal, Birmingham, Ala., to acquire scrap yards in the Atlanta area that once belonged to Recycling Industries Inc. Jefferson Iron & Metal’s operating subsidiary is Regional Recycling LLC, which will also be a partner in the new venture.

The new partnership, known as Metal Assets Acquisitions LLC, will operate Atlanta area yards that had belonged to Central Metals before they were acquired by the ill-fated Recycling Industries. The new partnership has acquired four yards in the Atlanta area.

In July, Gordon Industries of Statesville, N.C., acquired four Recycling Industries facilities in North Carolina.

Icahn Pushes for Philip Sell-Off

Billionaire Carl Icahn, who is the largest investor in Philip Services Corp., Hamilton, Ontario, Canada, says he might seek control of the company if it does not sell off its scrap metal operations.

According to a report in the Canadian newspaper the Financial Post, Icahn has said it is time for the company to dump its scrap metals business, and is signaling his belief at the same time he has increased his stake in the publicly-traded company.

In a filing made with the U.S. Securities and Exchange Commission, Icahn discloses that he has boosted his stake in Philip from 42.3% to 46.7%, and says he might seek control of the company if its metals business is not sold.

In one portion of  the filing, representatives for Icahn write, “[We] have become increasingly concerned about the performance of Issuer’s metals business, which has reinforced Registrants’ belief that [Philip] should seek to dispose of its metals business.”

In 1999, executives for Philip announced that they would be seeking to sell the scrap metals portion of the business, but ultimately decided against it after being dissatisfied with the low bids being received for the assets.

The company bought most of its scrap holdings in 1997 and 1998 at a time when it was competing with two other publicly traded companies to purchase assets at inflated prices. Among the companies purchased by Philip were Luria Brothers and Luntz Corp. of Ohio, Steiner-Liff Metals and Southern Foundry Supply in Tennessee, and Intermetco Ltd. in Ontario.

The company ultimately decided to deal with its cash crisis by filing for bankruptcy protection in Canada and the United States.

Icahn also indicated in the SEC filing that he might acquire more Philip shares in the open market, either privately or directly from Philip, and that he may also communicate with other shareholders to discuss Philip’s future.

Web Sites Winding Down

While it’s still possible for recyclers to buy and sell materials online, the number of Web sites to choose from is declining. Several Web sites that came online catering to the metals industry or the paper industry ceased operations in the first half of 2001.

MetalSite, Pittsburgh, and its affiliated company, ScrapSite, are among the most recent casualties, having suspending operations June 8th. Ralph Pinkert, president of ScrapSite, says that despite the company generating more than $60 million in transaction volume in the roughly one year it has been in business, the significant cost of running the operation has forced the company to close.

Pinkert noted the company hopes to re-launch the site in the future. One of the biggest problems the company suffered from was the extreme difficulties many of the site’s backers have had.

MetalSite was launched in 1998 with support from Weirton Steel, LTV Steel and several other large steel companies.

When cash began running short last year, MetalSite’s steel industry backers had too many problems of their own to provide any more funds. MetalSite’s nine stockholders had lent $35 million to the business, and MetalSite had not been paying interest on those loans, according to the Pittsburgh Post-Gazette.

A statement released by ScrapSite notes that the company is pursuing restructuring possibilities.

Anonline marketplace for specialty metals, Metalspectrum LLC, Atlanta, has also ceased operations. The company cited less-than expected user acceptance and high operating costs as reasons for the closure.

The trading site began operations slightly more than one year ago. The plan for the site was to act as a neutral market for buying and selling aluminum, stainless, copper, brass and other metals. MetalSpectrum had the initial