Scrap Industry News

Onex Corp., based in Toronto, has agreed to acquire Tube City IMS Corp., Glassport, Pa., a provider of outsourced services to steel mills, in a transaction valued at about $720 million.

Tube City IMS, operating at 66 steel mills throughout the United States, Canada and Europe, through its Tube City and IMS divisions, provides raw materials procurement, scrap and materials management and slag processing services. The company employs nearly 2,350.

"We have found an exceptional and strong management team at Tube City IMS," Tim Duncanson, an Onex managing director, says. "The company is the largest outsourced provider of these services in North America and the team has positioned Tube City IMS to become the global leader. We’re excited to partner with them and work together to achieve this goal," he adds.

"Onex has a successful track record of developing global leaders, particularly in outsourcing, and we believe our company will benefit greatly from its experience," I. Michael Coslov, chairman and CEO of Tube City IMS, says. "We are delighted to have found in Onex a partner that shares management’s vision to grow and expand the business."

The acquisition is subject to customary conditions and is expected to close early in 2007. The equity investment of approximately $240 million will be made through Onex Partners II, Onex’ $3.5 billion private equity fund, and will include a significant investment by Tube City IMS’s senior management team.

Onex manages third-party private equity investments through its Onex Partners and ONCAP family of funds as well as a real estate and a public market fund.

Smorgon Steel Group Ltd., headquartered in Australia, is acquiring the operating assets of Industrial Metal Recycling (IMR) for an undisclosed sum.

IMR (which was profiled in the July 2003 issue of Recycling Today magazine) operates four locations in Maine. The locations add to Smorgon’s U.S. scrap recycling facilities, which include existing sites in Chesapeake, Va., and Tampa, Fla.

As a privately owned firm, IMR handles about 100,000 metric tons of ferrous scrap and 10,000 metric tons of nonferrous scrap each year, representing a significant share of the Maine recycling market.

"This transaction will enable us to efficiently build on our earlier acquisition of the ITI assets in Virginia and Florida, says Smorgon Steel’s Managing Director and CEO Ray Horsburgh. "Like ITI," he adds, "the IMR assets are well located relative to both rail and port facilities, enabling us to efficiently service both domestic and export markets with processed scrap metal."

The company has also announced plans to invest $25 million to open its first North American manufacturing facility in Botetourt County, Va.

Smorgon Steel will occupy a 124,000-square-foot building in Troutville, Va., and will produce LiteSteel beam for the residential and commercial building industry.

The Houston Police Department has undertaken an operation geared toward reducing scrap metal theft in the city.

Like many other large and small cities, Houston has seen scrap metal thefts explode during the past year. According to Vicki King, assistant Houston Police chief, the police department has executed a four-phase attack to curtail the theft of copper, aluminum and other high value metals.

King says that the police department started the project by training some police officers on the finer points of the scrap metal business. "We conducted work with scrap recyclers," King says. By gaining market intelligence, the police department was able to ascertain the locations of many of the "fencing" operations that took in the obviously stolen metals.

After investigating where the stolen scrap went, the police department began an undercover operation through which it was able to further identify the operations and people who willfully purchased stolen material. The police recently began making arrests. According to the Houston Chronicle, nine felony arrests and 22 misdemeanor arrests took place during the last week in November.

King is quick to note that Houston police are working carefully not to damage the business of those scrap yards running clean operations.

Along with the police crackdown, the Houston City Council is expected to introduce an updated ordinance that will further help reduce the amount of theft taking place in the city.