Sims buys US aluminum processor

Sims Ltd. has acquired certain commercial and operating assets of Alumisource Corp., an aluminum scrap processor and provider of furnace-ready products based in the Pittsburgh area. Sims is paying an initial $22.5 million for the company with additional payments expected over the next three to five years using a predetermined earnout formula, according to a news release Sims issued about the purchase.

Alumisource provides raw material inputs to the aluminum industry in the form of custom shredded and blended aluminum scrap, according to its website. “Through careful sourcing, inspection and processing, we are able to provide a unique aluminum scrap alternative that can be used as feedstock in either reverb or rotary furnaces,” the site notes.

The company also supplies the steel industry with raw materials for artificial slag conditioners, deoxidation and desulphurization products.

Alumisource is based in Monessen, Pennsylvania, which is 30 miles south of Pittsburgh, and operates a plant in Richmond, Kentucky, about 30 miles south of Lexington, Kentucky. Both plants have rail access, multiple truck loading docks and certified 70-foot truck scales, according to the company’s website.

The net increase in Sims’ North American metal division’s nonferrous retail sales volumes is forecast to be approximately 33,000 metric tons as a result of the purchase. Sims Metals' nonferrous retail volumes were 140,000 metric tons in the 2020 fiscal year, according to Sims.

Alistair Field, CEO and managing director of Sims, says, “I’m pleased to achieve this key milestone toward delivering our strategic targets and growing nonferrous retail volumes in North America. Major aluminum customers in the United States continue to seek product that is suitable for direct charging. Alumisource meets these needs by providing ‘inspec’ furnace-ready product in an automated and safe manner.”

Field says Alumisource’s founder and CEO Gabe Hudock will continue to manage the acquired company for a minimum of three to five years. He adds, “Sims has a longstanding relationship with Alumisource, and I know the culture that Gabe has cultivated around safety and sustainability fits well with our overall culture and our focus on safety.”

Field continues, “We are committed to a disciplined capital management approach and ensuring that new capital investments fit with our strategy and purpose as well as meeting minimum hurdle requirements.”

According to a transcript of Sims’ Q2 2021 earnings call prepared by Seeking Alpha, Field said the purchase “is a great step forward to increasing our volumes of processed nonferrous products.”

He said the Alumisource facilities have “room to grow”  and, “from a processing point of view, [have] very high-class aluminum shredders which then feed into a smelting operation.” This gives Sims the ability to directly supply its aluminum smelting customers, he added. “And that's a really key step for us. So, I think, the processing skill set that we've acquired but also the growth potential is really what we've been seeking.”

Founded in 1917, Sims Ltd. is based in Australia. Its Sims Metals division is based in Rye, New York. The company’s other divisions include Sims Lifecycle Services, Sims Municipal Recycling and Sims Resource Renewal.