Sims considers sale of UK yards

Global scrap metal and electronics recycling company Sims Ltd. is continuing a strategic review process that could result in the sale of its network of scrap yards in the United Kingdom.

In a late-November statement filed with the Australia Securities Exchange (ASX), the Sydney-based company says it has been undertaking an operational assessment of its U.K. Metal business unit. “The objective of this process [has been] to explore various options to enhance the performance of the UK Metal business and maximize shareholder returns,” the company writes.

Sims says the business unit has strategic value and plays a key role in supplying critical high-quality scrap to meet the growing domestic and export demand for low-carbon steel, copper and aluminum production.

After undertaking a preliminary process this summer, Sims has decided to proceed to a full strategic review of the U.K. business. “Further supporting a strategic review have been expressions of interest from potential buyers indicating that these assets may well deliver enhanced value to the company’s shareholders through alternative ownership,” Sims says.

The company says the next stages of its strategic review will encompass the consideration of strategic partnerships, co-investment and potential divestment transaction structures. Sims has appointed Australia-based Macquarie Capital to assist with the process.

“With 28 facilities and four shredders processing over 1.4 million metric tons of scrap metal annually, U.K. Metal is a leading scrap metal provider in the region,” says Stephen Mikkelsen, CEO and managing director of Sims Ltd.

“The business is uniquely positioned to support steel and nonferrous metal-producing industries with their transitions to low-carbon raw materials and production."

A recent report by Dutch bank ING indicates only 19 percent of steelmaking in the U.K. involves scrap-fed electric arc furnace technology. That figure—which is far below the 69 percent rate in the United States or 43.7 percent rate in the European Union—is poised to change in a few years if two blast furnace-to-EAF conversion projects in the U.K. come to fruition.

On the export front, U.K. scrap metals processors could soon enjoy an advantage if several proposed EU regulations involving export approvals and designations of metals as critical or strategic materials move forward on the continent as discussed.

“The objective of the strategic review is to ensure Sims is maximizing value from the strong platform [that] we have developed over many years in the region," Mikkelsen says.

Sims says it intends to progress the review and keep shareholders informed of material developments as appropriate.