Scrap Industry News

The Institute of Scrap Recycling Industries Inc. (ISRI) has applauded Sen. Olympia Snow (R-ME) and Sen. Tom Carper (D-DE) for introducing S. 1587, the Recycling Investment Saves Energy (RISE) Act.

According to ISRI, the RISE Act will help increase and improve recycling in the U.S. by providing tax incentives for purchasing recycling equipment.

The bill creates an accelerated depreciation allowance of 50 percent in the first year to purchasers of new recycling equipment installed after Dec. 31, 2006.

"The RISE Act will enable recyclers to buy and deploy equipment with improved technologies sooner and operate with greater efficiency," ISRI President Robin Weiner says. "This bi-partisan legislation will have a significant positive impact on all recycling sectors in the United States."

The act also helps clarify that materials destined for recycling are considered valuable "scrap" rather than "waste," which is material destined for landfills.

"The RISE Act demonstrates the value of the Congressional Recycling Caucus as a means to educate lawmakers about the contribution recycling makes to the U.S. economy, global trade, resource sustainability and the environment," Wiener adds.

Sims Group Ltd. has entered into an agreement to merge its Southern Californian metal recycling assets with Adams Steel LLC to create a new entity called SA Recycling LLC.

SA Recycling, which will be owned equally by Simsmetal West LLC and by Adams Steel, will operate in Southern California, Arizona, southern Nevada and northern Mexico.

The venture will combine Sims’ deep-water facility at the Port of Los Angeles with Adams Steel’s two inland shredding operations and extensive network of inland feeder yards.

George Adams, current president of Adams Steel, will run the new business. He will report to a board of eight directors, evenly split between Adams and Sims. Sims will nominate the chairman and CEO of the joint venture.

SA Recycling will handle more than 2 million metric tons of ferrous scrap and nearly 100,000 metric tons of nonferrous scrap. Revenues are expected to top $600 million.

Commenting on the merger, which is subject to the notification and waiting period requirements of the U.S. Hart-Scott-Rodino Antitrust Improvements Act, Sims Group Chief Executive Jeremy Sutcliffe says, "Sims has had a close association with Adams Steel based around its long-term exclusive supply agreement with the former Hugo Neu operations. This agreement was due to expire in early 2008, and the combination of the two businesses is a logical extension of our existing relationship." He adds, "The merged business is a perfect fit of Sims’ export capability and Adams Steel’s strength and reach in the domestic sourcing of material."

The majority of ferrous material arising from SA Recycling will be sold to Sims Group Global Trade Corp. under a third-party sales agreement. SA Recycling anticipates having its own stand-alone banking facilities to finance working capital and growth.

"This is an exciting further step in Sims’ strategy of strengthening its position in the rapidly evolving and highly dispersed North American metals recycling industry and delivers a solid platform for further growth throughout the southwest of the U.S.," Sutcliffe says.

River Metals Recycling (RMR) has purchased the assets and business of Xenia Iron & Metal. The acquired company, founded 90 years ago, is near Cincinnati. Xenia also operates Greensburg Recycling Inc., a scrap yard in Indiana.

RMR will operate the Xenia, Ohio, and Greensburg, Ind., scrap yards under the RMR name, but plans to continue to use the Xenia Iron & Metals and the Greensburg Recycling names during a transition period. RMR says it expects to expand both locations.

RMR, a wholly owned venture of The David J. Joseph Co., is headquartered in Fort Mitchell, Ky.

River Metals Recycling, formed in 1998, claims it is the largest scrap processor in Kentucky and in the greater-Cincinnati area, having purchased Somerset Scrap, Tri-State Industrial Services and Xenia Iron & Metal in the last three years. The company has yards in the Kentucky cities of Henderson, Livermore, Louisville, Newport, Owensboro, Paducah and Somerset, as well as in Metropolis, Ill.; Xenia, Ohio; and Greensburg, Ind.

Metalico Inc., based in Cranford, N.J., has entered into separate agreements to purchase substantially all of the operating assets of Annaco Inc., an Akron, Ohio-based scrap metal recycler, and most of the outstanding capital stock of Totalcat Group Inc., a Newark, N.J., recycler and manufacturer of catalytic devices.

Metalico has scrap operations in New York and Pennsylvania and lead fabricating facilities in Alabama, Illinois, Nevada and California.

The company’s Metalico Akron Inc. subsidiary is buying Annaco’s assets, while another subsidiary, Metalico Akron Realty Inc., will acquire rights from affiliates of Annaco to the real property used in Annaco’s operations.

Annaco processes approximately 150,000 tons of ferrous and nonferrous scrap per year. The company specializes in motor block processing.

Metalico also announced that it is acquiring 82.5 percent of Totalcat’s stock, with both sides having rights to require the sale of the remaining Totalcat stock to Metalico at a future date.

Totalcat operates three primary lines of business. Its Federal Autocat subsidiary recovers platinum group metals from scrapped ceramic and metallic substrate catalytic converters. Through HyperCat Advanced Catalyst Products, it manufactures emission control products for the emerging specialty catalytic device market using proprietary nanotechnology. A second HyperCat entity is developing proprietary technology for the cleaning and recycling of diesel particulate filters. Totalcat also has operations in West Goshen, Pa.

"These acquisitions dovetail perfectly with our strategy to expand our footprint along the Great Lakes corridor and to diversify our base of commodities," Carlos Agüero, Metalico’s president and CEO, says. "Coupled with our recent acquisition of a specialty metals recycler in Pennsylvania, we are well on our way to the geographic and commodity diversity that has been part of our long-term goals."

The aggregate purchase price for the two acquisitions is approximately $63 million (including an allocation for the Annaco real property interests), subject to additional closing adjustments for Annaco’s inventory at closing in excess of a predetermined amount and Totalcat’s net working capital at closing in excess of a predetermined amount. Metalico Akron will also make an annual payment to Annaco for fiscal years 2007, 2008 and 2009 (any payment for 2007 to be prorated) if the acquired assets perform above a predetermined income level during such periods.

Metalico says it expects to finance the purchases through debt facilities to be entered into at the closing of the first transaction and available cash, including a portion of the proceeds of Metalico’s recently announced private equity placement.

PSC Metals, based in Mayfield Heights, Ohio, has acquired the assets of Midwest Sales LLC, its second acquisition this year.

Midwest Sales is a six-acre ferrous and nonferrous recycling facility in Cuba, Mo. PSC Metals will use the site as a feeder yard for its shredding operation in St. Louis.

Denzil Boss, PSC general manager of operations/growth projects, says, "This acquisition reflects our strategic plan that is committed to aggressively growing our business in competitive markets."

The facility, which employs eight people, will also add new scales and radiation detection equipment.

Earlier this year PSC acquired the ferrous and nonferrous assets at the Akron and Barberton, Ohio, facilities of Ravenna Salvage Inc.

Fort Wayne, Ind.-based OmniSource Corp., one of the largest scrap metal recycling firms in the United States, is close to building a new facility.

The company is seeking a land-use permit to convert a nearly 60-acre plot of land from agriculture to industrial use.

OmniSource operates recycling facilities primarily in the Midwest, with scrap yards in seven states. If OmniSource gets the go-ahead for the Kentucky yard, it will be the company’s first yard in that state.

According to local reports, the Tripe S Planning Commission had voted to recommend the zone change if some contingencies were put in place. The zone change allows OmniSource to acquire the land from Norfolk Southern Railway.