Scrap Industry News

Sims Group Ltd., headquartered in Australia, has acknowledged in a press release that representatives from Hugo Neu Corp. have contacted advisors concerning possible strategies for its position in Sims.

New York-based Hugo Neu, which holds a 26 percent stake in Sims Group, is considering the sale of some or all of its stock in the company as one option. Hugo Neu is the largest shareholder in Sims, which is the largest metal recycling company in the world. Sims Group acquired Hugo Neu about two years ago for approximately $450 million.

According to the Sims Group statement, Hugo Neu is restricted from selling any of its shares in the company until the end of April 2007. According to published reports, Hugo Neu’s stake in the company is valued at approximately $553 million. Sims says it may consider waiving the lockup period if requested, though Hugo Neu had not yet made that request at the time of the company’s statement in late January.

Metal Management Inc., Chicago, has announced its financials for the third quarter ended Dec. 31.

The company generated consolidated net sales of $524 million in the third quarter and net income of $15.6 million. According to Metal Management, this is an increase of 33 percent compared to consolidated net sales of $395 million during the same quarter of the previous year.

Metal Management reports that it processed and sold or brokered roughly 1.4 million tons of metal, including ferrous yard shipments of about 1.2 million tons and nonferrous shipments of about 127 million pounds, during the quarter. The company says it turned ferrous inventories approximately 11 times and nonferrous inventories (excluding stainless and alloy) approximately 15 times.

For the first three quarters of the year, Metal Management reported consolidated net sales of $1.6 billion, an increase of 39 percent compared to consolidated net sales of $1.2 billion for same time the previous year. The company’s net income was $89.5 million for the nine months ended Dec. 31, 2006, compared to $37.7 million for the nine months ended Dec. 31, 2005.

"The men and women of Metal Management performed admirably in our third fiscal quarter in the face of sluggish domestic ferrous market conditions, as many consumers adjusted inventory levels toward the end of the calendar year," Daniel Dienst, chairman and CEO of Metal Management, says. "We responded quickly by leveraging our transportation and logistics capabilities to take advantage of opportunities outside the United States."

Dienst also says that Metal Management is pleased to report strong volume and near record revenue during a part of the calendar year that is historically known to be seasonally slow.

He continues, "Nonetheless, the weaker pricing environment for ferrous scrap and the prices we realized in export sales after freight compressed margins on ferrous products."

Dienst says that Metal Management’s nonferrous operations did well during the third quarter, despite slower stainless steel mill consumption in the United States and declining copper prices. "Nonferrous metal recoveries and contributions to sales and profit from our induction sorting systems remained strong during our third fiscal quarter," he says.

"We are pleased to report that demand for ferrous scrap and ferrous scrap pricing in the U.S. have improved significantly since the turn of the calendar year, and international demand for ferrous scrap remains robust," Dienst says. "We’re optimistic that with the dedication and focus of Metal Management’s outstanding employees, we’ll deliver a strong finish to our fiscal year in March."

Onex Corp., based in Toronto, has completed the previously announced acquisition of Tube City IMS Corp., a leading provider of outsourced services to steel mills, in a transaction valued at about $730 million.

"We are delighted to acquire Tube City IMS and are excited to begin working with such a high-quality management team," Tim Duncanson, managing director with Onex, says. "This business has an abundance of opportunity both in North America and abroad."

I. Michael Coslov, chairman and CEO of Tube City IMS, says, "With Onex as our partner, we are ready for our next important stage of development. Together with Onex, we will enhance our market leading position in North America and work to replicate that success globally."

Tube City IMS, operating at 67 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. Headquartered in Glassport, Pa., the company employs approximately 2,400 people.

The equity investment of about $200 million was made through Onex Partners II, Onex’s $3.5 billion private equity fund. Tube City IMS’s senior management also invested significantly in the deal.

Onex manages third-party private equity investments through the Onex Partners and ONCAP family of funds. It also manages a real estate fund and a public market fund. Through these activities, Onex generates annual management fees and is entitled to a carried interest on nearly $3.5 billion of third-party capital. Onex has annual consolidated revenues of $20 billion and consolidated assets of $20 billion.

AMG Resources Corp., Pittsburgh, and Alliance Steel Service Co., Minneapolis, have formed AMG Alliance LLC, a new joint venture.

AMG Alliance operates a full service scrap metal recycling facility in St. Paul, Minn.

The new facility is along the Mississippi River next to AMG’s existing St. Paul facility. It is equipped to ship material via truck, rail or barge.

The AMG Alliance yard is capable of processing industrial and obsolete ferrous and nonferrous scrap. Manufacturers and demolition contractors are among the yard’s suppliers.

AMG Alliance expects to open its facility by the time barging is possible on the Mississippi River.

"This enables AMG to take full advantage of our riverfront location by combining our first-rate commercial and transportation capabilities with Alliance’s tremendous experience and reputation in the Twin Cities area," Eric Goldstein, AMG Resources vice president, says.

AMG Resources currently operates facilities in Minneapolis and St. Paul, while Alliance Steel operates an industrial scrap facility in Minneapolis, as well as an auto shredding facility in Duluth, Minn. Alliance also partners with Re-Alliance on a scrap yard in Minneapolis.

"We are thrilled with the opportunity to secure our own port and to be able to have a partner with such a great reputation in the industry," Michael Zweigbaum, president of Alliance Steel, says.

Blaze Recycling & Metals (profiled in the October 2006 issue of Recycling Today) has acquired around 35 acres of land in Phenix City, Ala., to install an additional scrap recycling facility. The new yard will process ferrous and nonferrous metals and will include an auto shredder and an auto parts facility.

The company’s Gary Blase says that Blaze Recycling hopes to have between 2,000 to 3,000 automobiles on the site when the new shredder starts.

The new site houses the company’s second auto shredder. Since 2004, Blaze has operated an auto shredder at its Lawrenceville, Ga., yard.

In addition to having auto hulks on site to feed its new shredder, a number of small, independent auto parts/dismantlers in the area could benefit from a lower freight rate by shipping to the new yard.

The Phenix City plant is Blaze’s fifth yard. The company also operates plants in Norcross, Ga.; Lawrenceville, Ga.; Griffin, Ga.; and Gainesville, Ga.

Blaze expects to open the scrap yard early this year, the auto shredder installation is expected to be complete within two years.