Trading places: while some of Canada's scrap consumers struggle, recyclers shift to serving export markets

Recycling Today, May, 2004 by Myron Love

Despite the Canadian equivalent of Chapter 11 claiming a couple of companies, and steelmaker Stelco considering selling off some of its assets, 2003 was a good, solid year for the Canadian metal recycling industry, says Len Shaw, executive director of CARl (Canadian Association of Recycling Industries). He adds that the projections for 2004 indicate that market conditions will continue to be good.

"Last year, there was a good flushing out of companies that weren't doing so well," notes Rick Sobottka, vice-president of corporate development for Triple M Metals, the largest metals recycling company in Ontario. "The industry is much healthier as a result, and I expect everyone will have a much healthier balance sheet this year."

METAL MADNESS. Triple M has plants in Brampton, Ontario, the Maritime provinces and Winston-Salem, N.C., and trading offices in Montreal and New Jersey. Sobottka reports that Triple M recently purchased a couple of new locations in Hamilton, Ontario, and expects to add some more yards this year.

Sobottka observes that scrap prices were at historic highs in February and March. Rob Sinclair, environmental specialist, recycling, for National Resources Canada, Minerals and Metals Section's International and Domestic Market Policies Group, reports that both export shipments and income were significantly higher in 2003 compared to 2002. He expects that once early 2004 numbers are calculated, the increase will be even more apparent.

The most recent data provided by Natural Resources Canada shows that exports for 2003 stood at 2.9 million metric tons, valued at $1.6 billion Canadian, as compared to 2.5 million metric tons, worth $1.4 billion in the same period in 2002.

Canada imported 1.4 million metric tons of scrap metal last year (compared with 1.6 million in 2002). The 2003 imported material was valued at $1.3 billion, slightly more than the $1.27 billion paid out the year before.

For 2004, the peak may have come early. "Prices are starting to back off during the second quarter," Sobottka suggests, "and [they'll probably] reach more reasonable levels. Demand in the first quarter was exceptionally high."

Lorne Kalisky, managing director of Montreal-based American Iron & Metal Inc., also reports that business is up on the scrap side. "The demand for aluminum is being pushed by the China markets," he says, "while copper scrap supplies are still tight. We are bullish about this year."

Kalisky reports that the company, which employs more than 450 workers, has recently installed the largest briquetter in Canada in its Montreal East plant. Serge Thibault, American Iron and Metal's director of nonferrous scrap, adds that the 30,000-square-feet piece of equipment has the capacity to process 50 tons of scrap per hour. The $4 million (Canadian) briquetter became operational March 8.

For ABC Recycling on the West Coast, 2003 was also a good year. David Yocholwitz, the Vancouver-based firm's general manager, reports that 2004 promises to be even better. Yocholwitz also cites the Chinese market for his optimism.

"The Chinese are putting pressure on prices," he says. "The commodities market is skyrocketing. The only thing holding us back is a shortage of materials. The nonferrous side is still tight."

ACROSS ALL MARKETS. Brian McIver of Nova Pb, Canada's leading lead recycler, reports that lead prices are also at an all-time high, again driven by demand from China. Demand is such, he says, that inventories at the end of January were half of what they were a year before. In addition, with the generation of spent lead-acid batteries in Canada continuing to decline because batteries are lasting longer, Nova is diversifying its operations.

In 2002, the Montreal-based company received a new operating permit that allows it to process spent pot liners (SPL) generated by the primary aluminum industry. "Our proprietary technology converts hazardous SPL material into CALSiFrit, a commercial material that will be entirely consumed by the cement industry," McIver says. "All incoming SPL and other raw materials axe being recycled with no hazardous waste or by-products generated."

Nova spent more than $7 million U.S. developing the technology and started commercially recycling SPL in January 2003. The current installation is capable of recycling approximately 35,000 metric tons of aluminum SPL per year.

"There used to be 12 aluminum smelters in Quebec," McIver notes. "Now, as a result of mergers and acquisitions, there are just three left. Most recently, Alcoa acquired Reynolds, and Kaiser, who used to be number three, closed [its nearby smelter]."

"We've been very, very busy," says Michel Poulin, vice-president of Quebec Metals Recycling, a division of Quebec SNF, which has a workforce of 275. "It's about time we had a good year."

The company did the same amount of volume in 2003 as 2002, Poulin reports, but good demand and higher returns on some items helped the firm regain some profitability. CARI members are pleased with the direction outlined in the government's Canada Action Plan 2000 on Climate Change, which emphasizes enhanced recycling. Mike Clapham notes that CARI was much involved in the consultation process.