Scrap Industry News

Novelis and Alcoa Form UBC Buying Company
Two of America’s largest consumers of aluminum used beverage containers (UBCs), Novelis and Alcoa, have announced the formation of a company designed for the joint procurement of UBCs for both firms.
“Evermore Recycling LLC is a new, independent company formed by Novelis and Alcoa for the procurement of aluminum UBCs,” reads a statement issued by the two companies. “Evermore Recycling is designed to create value by increasing efficiency, building stronger supplier relationships and increasing recycling.”

According to the company’s Web site, www.evermorerecycling.com, it began initiating commercial relationships with prospective suppliers for deliveries effective Jan. 1, 2010.

Companies wishing to sell directly to Evermore can begin the process by providing contact information through the company’s Web site or by calling (877) 932-9822.

Novelis has a slight majority ownership position in Evermore.

“Evermore Recycling [will] work to increase the quality of UBCs and decrease freight costs, inventory and administrative costs while generating other cost savings through more effective supply chain management,” the news release states. “Higher quality UBCs will yield higher value for suppliers, and a more efficient supply chain will result in more consistent shipments and more cost-efficient operations.”

Although Evermore begins as a brokerage service operating out of Nashville, Tenn., and from regional buying offices, it will evaluate capital investments to improve the quality, consistency and availability of UBC supply.

India Revokes Ban on Scrap Imports
According to a report by the India-based newspaper Business Standard, the Indian government, in a move to ease the tight supply of secondary nonferrous metals, has revoked a ban on scrap imports. The decision will help to clear nearly 1,000 containers clogging ports without the intervention of customs official.

According to Business Standard, India imports nearly 1.5 million metric tons of metal scrap to meet the requirements of small-scale industries in the country. Currently, the scrap melting industry is operating at 20 percent to 25 percent of its capacity in light of constrained raw material supplies.

The country’s customs department had allowed imports of base metal scrap beginning July 21 by users only, instead of traders, citing environmental concerns related to the discharge of harmful gases.

Sims Metal Management Announces Fiscal 2009 Results
Sims Metal Management, based in Australia, has reported revenue of $8.6 billion and a net loss after taxes of $150.3 million for fiscal 2009. The world’s largest metal recycling company reports net income before a non-cash goodwill impairment charge of $40.8 million.

Sales revenue increased 13 percent to $8.6 billion largely because of the merger with Metal Management Inc., Chicago, and despite year-over-year declines in average selling prices, particularly in the second half of fiscal 2009.

Sims Metal Management’s fiscal cash flow from operations was $554 million compared to $248 million in fiscal 2008. In fiscal 2009 the company’s total scrap intake and shipments were 12.6 million metric tons and 13.2 million metric tons, respectively. Intake and shipments declined predominantly as a consequence of the global financial crisis by 28 percent and 25 percent, respectively, as compared to pro forma intake and shipments in fiscal 2008, according to the company.

Group CEO Daniel W. Dienst says, “Fiscal 2009 was an extremely difficult year for Sims Metal Management, as it was for our entire industry and all companies engaged in the global trading of bulk commodities. The challenges we faced due to the global financial crisis during fiscal 2009—the worst on record for perhaps 80 years—included the near halt of the credit markets, the failure or inability of certain ferrous and nonferrous consumers to honor contractual commitments, the severe constriction of scrap flows around the world and substantially reduced demand for recycled raw materials.”

Dienst says the company reduced spending and headcount to mitigate the effect of the global recession on the company’s operations. “We have maintained a strong balance sheet through low gearing and we more than doubled cash flow from operations in the past fiscal year, providing us with the financial flexibility to further expand our unrivaled global footprint and continue with technology and efficiency investments.” He adds, “With pricing and demand for scrap improving, and subject to recovery in scrap generation, we believe Sims Metal Management is poised for renewed growth, success and shareholder value creation in fiscal 2010.”

In North America, sales revenue was up 38.2 percent on the prior corresponding period to $6.4 billion. On a U.S. dollar equivalent basis, sales revenue was up 11.6 percent to $4.8 billion. The company posted a loss of $88.5 million in earnings before interest and tax. Sims Metal Management’s fiscal 2009 pro forma scrap intake in North America declined by 29 percent relative to the prior corresponding period.

Full year results for North America were affected by inventory adjustments, non-ferrous contract renegotiations and other atypical items amounting to $71 million, $19 million and $36 million in losses, respectively, as well as a non-cash goodwill impairment charge of approximately $190 million (pre-tax and after-tax). EBIT in North America would have been $227.5 million had it not been for these adjustments.

“We are encouraged by recent trends in the marketplace,” Dienst says. “Ferrous consumers in key export countries are returning to the market, as are U.S. steel mills, though volumes remain well below historical levels. This increased demand for ferrous scrap metal is driving improved pricing.”

Additional financial reports on Sims’ other operating regions can be found at www.recyclingtoday.com/news/news.asp?ID=15731&AdKeyword=sims.

ISRI Calls for Re-Engagement on Mercury Switch Program
The Institute of Scrap Recycling Industries Inc. (ISRI), based in Washington, D.C., has sent a letter to President Obama requesting his help with the recent decision by General Motors to withdraw from participation in the End of Life Vehicle Solutions (ELVS). The ELVS program is fundamental to the National Vehicle Mercury Switch Removal Program (NVMSRP).

In its letter, ISRI notes that American taxpayers own a significant portion of General Motors. It is for this reason that ISRI sent the letter highlighting the risk to the environment posed by GM’s action. GM is hiding behind technical bankruptcy issues to undercut the Obama administration’s environmental and health concerns, ISRI alleges.
ELVS was given responsibility in 2006 under the NVMSRP, facilitated by the Environmental Protection Agency (EPA), to lead and coordinate the efforts of auto manufacturers to collect, transport and properly recycle mercury switches removed from end-of-life vehicles by auto dismantlers and scrap recyclers. Auto dismantlers and scrap recyclers have been voluntarily removing these switches since 2006 under the NVMSRP program, which requires that the switches be sent to ELVS for recycling. Further, the NVMSRP established an incentive payment (currently $4 per switch), which ELVS sends to the auto dismantler or scrap recycler. The incentive is intended to help defray the cost of removing and handling the switches. It has been shown to be vital to ensure high switch recovery rates, thus reducing the amount of mercury released into the environment, according to ISRI.

The letter asks the Obama administration to  “take the necessary steps to keep GM’s support of ELVS in place” and to consider “providing the necessary funding to replenish the NVMSRP incentive fund that supports the small businesses that are tasked with ensuring the mercury is properly removed from these old cars,” and that it is also a necessary part of the CARS program.