Scrap Industry News

The board of directors of Metal Management Inc., headquartered in Chicago, has unanimously approved an agreement to be acquired by Australia’s Sims Group Ltd. The deal will create a company to be known as Sims Metal Management.

Under terms of the agreement, Sims shareholders will own about 70 percent and Metal Management shareholders about 30 percent of the combined company.

The combination of the two companies creates an operating presence on four continents with more than 200 locations around the world, including locations in 19 U.S. states. The combined company will have the processing and trading volume of more than 15 million tons of metal per year and will have combined revenue of more than $6.8 billion.

"We are very excited about the combination of Sims and Metal Management.," says Jeremy Sutcliffe, Sims’ CEO.

Daniel Dienst, Metal Management’s chairman, president and CEO, says, "Bringing Sims and Metal Management together accelerates both companies’ strategic plans and creates a clear global leader with unparalleled infrastructure, talent and financial resources. We are excited about the strength of our combined global organization and are confident we can achieve great things together."

The combined board will be comprised of seven existing Sims directors (two of whom are appointed by Mitsui) and five existing Metal Management directors.

PSC Metals Inc., based in Cleveland, has announced the acquisition of the assets of Wooster Iron & Metal Co. (WIMCO), a holding company with locations in Wooster, Alliance, Youngstown and Elyria, Ohio; and in Aliquippa, Pa. Joyce Iron & Metal Co., Columbus, Ohio, is also part of the WIMCO Group.

The company plans to close the acquisition in the early fall.

PSC Metals plans to retain all of the approximately 180 employees of the newly acquired companies. Key WIMCO associates include:

• David Spector, former WIMCO president, who now becomes PSC Metals vice president – buying, Northeast region.

• Mark Shapiro, former WIMCO vice president, who becomes general manager – nonferrous, Northern region.

• Sam Linnick, former WIMCO vice president, who becomes general manager – Wooster operations.

• Paul Garrett, former owner of Joyce Iron & Metal, who now becomes general manager – Columbus operations.

WIMCO’s operations include ferrous and nonferrous scrap metal services. With the addition of WIMCO’s shredding facility in Wooster, PSC Metals now operates nine shredders.

The U.S. Department of Transportation’s Maritime Administration (MARAD) has made arrangements to remove the last of several high-priority vessels from the James River Reserve Fleet in Virginia.

The agency has awarded five ship-disposal contracts worth a total of nearly $2.2 million to North American Ship Recycling of Sparrows Point, Md.

"This multiple-ship contract is great news," says Sean Connaughton, MARAD administrator. "Not only are we moving out five more ships, but there will no longer be any high-priority vessels remaining in the fleet."

The departure of the vessels Cape Charles, Pride, Scan, Southern Cross and Sphinx will bring the number of ships leaving the James River to 66 since January 2001.

The Sphinx is the only World War II-era ship in this group of five. The condition of the Sphinx made it a high-priority ship for MARAD for several years, but disposal was delayed while charitable groups tried to raise money to save it.

The remaining ships were built in the 1960s.

The Maritime Administration keeps ships in three National Defense Reserve Fleet sites to support Armed Forces movements and to respond to national emergencies. Those sites are the James River Reserve Fleet in Newport News, Va.; the Beaumont Reserve Fleet in Beaumont, Texas; and the Suisun Bay Reserve Fleet in Benicia, Calif.

When the ships become obsolete, the Maritime Administration arranges for their disposition.

Metal Management Inc., Chicago, has announced results for its first fiscal quarter that include increased sales but narrower profits.

The company generated consolidated net sales of $654 million for the quarter and net income of $22.7 million. Sales for the quarter increased 32 percent compared to the same quarter last year, but net income for the fiscal quarter was $22.7 million, compared to $44.9 million one year ago.

During the quarter the company processed, sold or brokered about 1.4 million tons of metal, including ferrous yard shipments of approximately 1.3 million tons and nonferrous shipments of approximately 120 million pounds.

The company turned ferrous and nonferrous inventories (excluding stainless and alloy inventories) approximately 11 times each.

"Though we faced some volatility this quarter, we efficiently leveraged our resources to turn our inventories and meet the needs of our valued consumers," says Daniel Dienst, chairman, CEO and president of Metal Management. "Markets were mixed in our first fiscal quarter, with weak ferrous conditions and continued strength on the nonferrous side."

The company also announced the completion of its acquisition of Universal Recycling Inc., which has facilities in Gary, Chesterton and La Porte, Ind.

The Institute of Scrap Recycling Industries Inc. (ISRI) is touting the growth of the House and the Senate Recycling Caucuses, which doubled to 128 members in the last year, following the ISRI member fly-in to Capitol Hill in June and year-round in-district outreach efforts.

"ISRI is grateful to the senators and representatives who have joined the Recycling Caucus," ISRI President Robin Wiener says. "The caucus is an important tool to educate policy makers about the important role the recycling industry plays in the creation of jobs in the United States, and the positive impact on the balance of trade, the environment and sustainable development," she adds.

ISRI members descended on Capitol Hill, visiting more than 100 offices June 26 to urge legislators to join the caucuses and learn more about the scrap recycling industry. ISRI says its members continue their outreach throughout the year, making individual visits, attending political events and holding facility tours aimed at introducing the industry to federal lawmakers.

Since 2006, the House Recycling Caucus has grown to 106 members. The Senate Recycling Caucus has grown to 22 members.

The caucus aims to study the legislative effect on recycling in a variety of areas, including trade, commerce and environmental policy. Chief among these, according to ISRI, is the effort to address the definition of solid waste to reflect that "scrap is not waste" and "recycling is not disposal."

Sens. Tom Carper (D-Del.) and Olympia Snowe (R-Maine) co-chair the Senate caucus. Rep. Frank Pallone (D-N.J.) chairs the House caucus.

More information about the caucuses is available by contacting Billy Johnson at (202) 662-8548 or Mark Reiter at (202) 662-8517.

Michigan State Sen. Buzz Thomas (D-Detroit) has introduced a bill that aims to crack down on scrap metal theft by more closely monitoring the state’s scrap dealers.

"My bill will help law enforcement curb this awful epidemic by placing a more watchful eye on scrap metal processors," says Thomas. "Most of these businesspeople are honest, but we must make sure that they are not endangering lives by dealing in illegal copper."

He adds, "It is not acceptable to sell a used car without proper title and it should not be legal dealing with scrap metal without proving lawful ownership. Obviously, with the increasing value of copper people will still attempt to steal it, but the state needs to tell people that we are serious in making sure that your scrap is clean and legal and sold legally."

Senate Bill 720 would regulate scrap metal processors in the same way Michigan regulates secondhand shops and junk dealers. It also would require:

• Local government to establish licensing fees;

• Processors to provide written records of all transactions to law enforcement every Monday; and

• Any material purchased must be kept for 15 days.

The bill was referred to the Committee on Economic Development and Regulatory Reform.

Alter Metal Recycling, St. Louis, is introducing a new method this fall to pay suppliers for their metals. The Alter Cash Card pilot program will run through the end of this year.

Customers will begin receiving payments through a single-use or a "reloadable" Alter Visa prepaid card in lieu of cash. The card will be accepted at a majority of retail establishments, according to Alter Metal Recycling, or can be used at on-site ATM machines at the company’s scrap yards.

When suppliers bring in their metal, the dollar value of the scrap is loaded onto a card and is immediately available for use. The card can then be cashed out at any of Alter’s on-site ATMs, taken to another ATM or spent like cash.

More information on the pilot program is available at www.altermetalrecycling.com

Alter Metal Recycling also has announced that it has merged its two Des Moines, Iowa, yards. Recently, Alter purchased the Namasco Steel building and 14 acres of land adjacent to its Euclid Ave. location, increasing the size of the facility. The facility now has one entrance for ferrous metal scrap and one for nonferrous scrap.

Sims Group Ltd. has reported a profit of $254 million, a 29 percent increase from the previous year, and a new record for the recycling company.

Additionally, the company reported sales revenue increased by 48 percent to $5.55 billion.

"The 2007 result, which is at the top end of our recent guidance, reflects a strong year for all of our regional businesses," says Jeremy Sutcliffe, Sims’ CEO. "The fourth quarter result was very strong with net profit after tax of $78.9 million, following a rebound in global ferrous prices and a greatly improved contribution from our North American operations. Volumes approaching 10 million metric tons handled in the year are a true reflection of the size and strength of our business today."

In North America, the company reported that its business, including the former Hugo Neu operations, improved significantly in the fourth quarter. For the full year, sales revenue was up 69 percent to $2.94 billion.

"The 2007 financial year saw the completion of the operational and management integration of the former Hugo Neu business," Sutcliffe says. "Markets in the U.S remain intensively competitive, but as the fourth quarter shows, a combination of the right market dynamics and management focus can deliver excellent returns."

Sutcliffe continues, "In the short term, our focus is on completing the Adams Steel joint venture in Southern California," Sutcliffe continues. "Management is also committed to technological upgrades to further improve metallic and plastics yields from our shredder waste streams."

Additional North American acquisitions are being considered, he notes. "Looking further ahead, we will also continue to review further opportunities in the fragmented North American metals recycling market to consolidate our existing positions and further extend our footprint."

In the European market, Sims also has reported a strong improvement in the market improvements. Sales increase by 44 percent to $1.44 billion.

The Sims Recycling Solutions division, which focuses on electronics recycling, reported sales revenue up by 79 percent from the previous year to $450.2 million. "Sims Recycling Solutions delivered a very encouraging result and its contribution to Group EBIT for the year was 14.1 percent. This increased to 16.1 percent in the fourth quarter, with the acquisitions of URI and Noranda in North America," Sutcliffe notes.

Looking forward, the company says the potential benefits flowing from improved ferrous prices in the first quarter were more than offset by higher ocean freight rates and a weak U.S. dollar. For these reasons, Sutcliffe says, "We anticipate a softer quarter, with earnings unlikely to match those of the corresponding period in the 2006 financial year, which was $68 million."

On the positive side, Sims expects to see increases in U.S. ferrous prices as in its second quarter. Sutcliffe says developing conditions "give cause for optimism as we look beyond September. Similarly, the supply/demand equation for nonferrous metals is balanced in favor of the supplier, and with the strength of Asian economies outweighing any negative impact of a slowdown in the U.S. economy."