Scrap Industry News

Superfund to Resurface?

The U.S. Environmental Protection Agency (EPA) has identified three industry sectors targeted for future Superfund-related financial assurance requirements and has named several others that will “require further study.”

The EPA says identification of these industry sectors is part of its effort under Section 108(b) of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), commonly known as Superfund, to recommend financial assurance requirements. The action announced is not a proposed rule or a final regulation.

The chemical manufacturing industry; the petroleum and coal products manufacturing industry (primarily meaning refineries and not coal mines); and the electric power generation, transmission and distribution industry are the three sectors that the EPA will target first for additional Superfund obligations.

In the same news release, the EPA also states that it “has identified the following additional classes of facilities that require further study in order for the agency to decide whether to develop proposed regulations: waste management and remediation services, wood product manufacturing, fabricated metal product manufacturing, electronics and electrical equipment manufacturing and facilities engaged in the recycling of materials containing CERCLA hazardous substances.”

According to the EPA, “Financial assurance requirements help ensure that owners and operators of facilities are able to pay for cleanup of environmental releases and help reduce the number of sites that need to be cleaned up by federal taxpayers through the Superfund program.”

EPA Strengthens Transboundary Hazardous Materials Shipment Regulations

The U.S. Environmental Protection Agency (EPA) has announced that it will strengthen regulations affecting the shipment of hazardous materials destined for recycling between the United States and other countries.

The measures are meant to increase the level of regulatory oversight and to provide stricter controls and greater transparency. The final rule aligns EPA’s hazardous waste import/export/transit shipment regulations with the procedures of the Organization for Economic Cooperation and Development (OECD), an international consortium made up of 30 countries, including the United States.

The EPA’s new measures are intended to bolster regulations regarding hazardous waste shipments into or out of the United States and to strengthen the set of regulations under the Resource Conservation and Recovery Act (RCRA) governing the shipment of hazardous waste within the United States.

The rule revises an existing RCRA regulation regarding the transboundary movement of hazardous materials for recovery among OCED countries to conform to legally required revisions made by the OECD. It requires domestic recovery facilities to submit a certificate after recovery of the hazardous materials has been completed.

Camden Iron, Smith Industries Form Joint Venture

Camden Iron & Metal LLC, Camden, N.J., a subsidiary of European Metal Recycling (EMR), and Smith Industries, Capitol Heights, Md., have undertaken a transaction designed to grow the two companies’ operations in the eastern United States.

Under the terms of the deal, a holding company, EMR/Smith Industries LLC, has been formed. This company owns both Camden Iron and Smith Industries. The holding company is jointly owned by EMR and Paul Smith, the previous sole owner of Smith Industries. No further terms of the transaction have been announced.

Both Camden Iron and Smith Industries engage in the business of collecting, processing and selling ferrous and nonferrous scrap, together operating 20 metal recycling yards in the Mid-Atlantic region.

“We are delighted to combine our Camden operation with that of Smith Industries—a business that we have held in high regard for a number of years,” says Colin Iles, EMR CEO. “We look forward to working with Paul Smith and his management team to further expand our collective activities.”

Paul Smith, CEO and president of Smith Industries, says, “This transaction represents the next age of growth for Smith Industries and combines two operations with very similar cultures and ambitions.”

Warrington, England-based EMR, one of the largest scrap metal recycling firms in the world, operates more than 120 locations globally. Within the past several years, the company has expanded its presence in the United States.

Smith Industries operates 13 metals recycling facilities in Maryland, Delaware and Virginia. The company operates shredders in Capitol Heights and Baltimore.

Metalico Completes Deals for Two Ohio Scrap Recyclers

Metalico Inc., headquartered in Cranford, N.J., has purchased the operating assets of Youngstown Iron & Metal and Atlas Recycling, both located in Youngstown, Ohio.

The acquisition includes all inventory, equipment and real estate owned by the affiliates of the sellers and used in their businesses. The purchase price was not disclosed.

Acquired assets include a Newell 80-104 auto shredder located directly adjacent to Youngstown Iron & Metal’s key consumer, V&M Star, a leading producer of seamless oil country tubular goods.

The shredder yard is supported by three other nearby locations, including a ferrous and nonferrous feeder yard in Warren, Ohio, and related transportation and maintenance facilities.

During the last two years, Youngstown Iron & Metal averaged $50 million of annual revenue and sold an annual average of 105,000 gross tons of scrap steel and about 15 million pounds of nonferrous products. The company’s operations complement Metalico’s Akron, Ohio, scrap operations, while Metalico’s Pittsburgh regional scrap operations are only 70 miles from the new facilities. The location will draw on Metalico’s extensive network of scrap suppliers and its capital resources to increase operating capacity and utilization at the shredder and elsewhere in the operations, according to a press release from Metalico.

“The Youngstown purchase is consistent with Metalico’s expansion strategy of penetrating geographically contiguous markets and extracting the operating synergies that surface in consolidation,” says Carlos Aguero, Metalico president and CEO.

“As a result of the weak economy and the tight credit conditions today for smaller, family-owned companies, we are finding realistically valued acquisition opportunities in markets we target for expansion,” he adds.

Freedom Metals Receives Approval for New Yard

The Winchester-Clark County (Ky.) Planning Commission has unanimously approved a change in a land use amendment to allow Freedom Metals to open a new scrap metal recycling facility in the county.

The vote, held Dec. 1, reclassifies the site from a heavy industrial wood treatment designation to a heavy industrial metal recycling designation. The owner of the land, Southern Wood Treatment Co., is selling seven acres to Freedom for the new  scrap metal recycling facility.

Spencer Blue, vice president of Louisville, Ky.-based Freedom Metals, says the new location will bring the number of facilities that the company owns and operates to three. The company has been family owned and operated since 1983.

Freedom Metals says it expects to open the new facility in the first half of 2010 and to employ 25 people at the yard in its first year. The workforce possibly could grow to 50 within several years, the company says. The site will include scales and material handling equipment with additional processing equipment potentially being added in the future.

The new yard will process ferrous and nonferrous metals, including auto hulks, as well as old corrugated containers and other recyclables. The facility also is situated on a rail siding, allowing the company to ship material via rail.

Schnitzer Narrows Loss for Quarter

Schnitzer Steel Industries, Portland, Ore., has reported a loss of $7.8 million for its fiscal first quarter, which ended Nov. 30, 2009. The results compared with a loss of $34.4 million for the same time a year earlier. Revenue for the quarter was $394.3 million, down 17 percent compared to one year ago.

“This is our second consecutive quarter of profitability from continuing operations and it marks an improvement in our results on a year-over-year basis,” says Tamara Lundgren, president and CEO of the company. “As we look across our global markets, we are seeing stronger and more broad-based demand than we saw at this time last year. Sequential margins improved in both our metals recycling and auto parts businesses, where we continue investing in projects and acquisitions to enhance our competitive advantages,” she adds.

The company’s metals recycling business generated operating income of $16 million for the quarter, compared with a loss in the first quarter of the prior year.

“We saw significant price volatility throughout the course of the quarter, with strengthening prices toward the end of November,” Lundgren says. “Although sales volumes were lower compared with the fourth quarter,” she continues, “our raw material purchases were at comparable levels, which allowed us to build inventories to meet the expected rebound in sales volumes and prices in the coming quarter.”

Ferrous scrap prices rose toward the end of the quarter after a sharp drop in late October and early November of 2009. The increase reflected strengthening demand, particularly in the export markets. Nonferrous prices also rose during the quarter.

Looking forward, the company says ferrous sales volumes should strengthen in light of improving market activity and higher inventories available for sale. Schnitzer says ferrous sales volumes should increase 40 to 50 percent compared with the levels in the first quarter, primarily resulting from higher export sales. The company says it expects nonferrous sales volumes to remain steady with first quarter numbers.

Schnitzer predicts a slight increase in ferrous net sale prices in the second quarter compared with the first quarter of fiscal 2010. Nonferrous markets also are improving, which should support higher prices for nonferrous metals compared with the first quarter of the fiscal year.

Normal seasonal declines associated with the winter months will affect the flow of material. As a result, Schnitzer says it foresees increasing raw material purchase costs. However, the rising sales price environment and increased sales volumes will more than offset the purchase cost increases, according to the company.