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August 3, 2001

Wabash Alloys, Commercial Metals Announce Acquisitions

Wabash Alloys LLC, Wabash, Ind., has agreed to purchase part of the aluminum operations of Philip Services Corp., Hamilton, Ontario, Canada. Wabash Alloys, a subsidiary of Connell Limited Partnership, Boston, is paying approximately US$70 million for an aluminum deoxidizing facility in Bellwood, Va., and aluminum alloys plants in Syracuse, N.Y. and Guelph, Ontario. The transaction is expected to close by the end of this year, pending the approval of Philip’s lenders.

Philip Services Corp. announced earlier this year that it the majority of its metals processing operations would be put up for sale as a means of paying off a considerable debt load carried by the company.

The announced sale does not include aluminum facilities owned by Philip Services in Painesville, Ohio and in Becancour and Baie-Comeau, Quebec, and certain other working capital items. Philip will pursue the sale of its Painesville operation with other interested parties.

"Philip has realized good value for these assets, despite difficult market conditions, reflecting the fundamental operating and market strength of our businesses," says Jack McGregor, Philip Services chief restructuring officer. "Although the transaction will necessitate a goodwill write-down of approximately US$27 million, it will nevertheless support the restructuring of our credit facility," he adds.

The acquisitions will further strengthen Wabash Alloys’ considerable presence in the secondary aluminum market.

In the southwestern U.S., Commercial Metals Co. (CMC), Dallas, has acquired A-1 Iron & Metal Co. Inc. of Houston. According to Harry J. Heinkele, president of CMC, A-1 is one of the largest processors of nonferrous metals in the Houston area.

The acquired Houston facility will report to Chock Yates, manager of an existing CMC Secondary Metals Processing Division facility in Houston. Simon Lusky, son of the previous owner of A-1 Iron & Metal, has been named CMC’s Manager of Nonferrous Metals in Houston.

 

U.K. Recyclers Give Decision Mixed Reviews

A decision by the British High Court has established that processed ferrous and nonferrous scrap is a raw material and not waste, a decision which has been welcomed by the Bureau of International Recycling (BIR) and other European scrap recycling organizations. The decision is not a complete victory, however, since unprocessed scrap can still be considered waste.

The judgement, issued on November 9, is the outcome of a legal challenge by the British Metals Federation against the government of the United Kingdom’s interpretation of the European Union definition of waste.

"This judgement provides an important legal precedent that I trust the European Commission will recognize," says BIR president Anthony Bird. "The vital importance of metals recycling to the European Union can be gauged from the fact that some 80 million tons of processed ferrous furnace feed was used in the production of 160 million tons of new steel in 1997," he adds.

When scrap is regulated as waste, it makes the exporting or importing of scrap to or from the European Union difficult. "The recycling business is now global, and it is neither practical nor equitable for the industry in one region to be made less competitive than the industry in another by outdated or irrelevant regulations," notes Bird. "BIR wishes to see a completely level playing field for all its members worldwide," Bird added, noting that he hopes the ruling will assist in avoiding further contradictory interpretation of the European Union definition of waste.

 

IMCO Buys Tennessee Alcan Plant

IMCO Recycling Inc., Irving, Tex., has agreed to purchase an aluminum alloys plant located in Shelbyville, Tenn. from Alcan Aluminum Ltd.

The Shelbyville facility, which was built by Montreal-based Alcan in 1989, can produce 120 million pounds of specification aluminum alloys per year.

IMCO chairman and CEO Don V. Ingram cites strategic market segment reasons for the purchase. The new plant "will help meet one of our major goals, which is to strengthen the company’s ability to serve the transportation sector," says Ingram. "About 30% of our annual processing volume is now provided to this market, up from less than 5% in 1994."

Ingram adds that the facility "is located near numerous producers of automobiles and truck components. It will provide IMCO with a southeastern base from which we can serve those manufacturers."

IMCO bills itself as the world’s largest recycler of aluminum and zinc. The company has more than 20 production facilities in the U.S. and one in the U.K.

 

China Offers Inspection Option

The Bureau of International Recycling (BIR), Brussels, has negotiated a customs inspection arrangement with the government of China on behalf of its member companies.

As it now stands, all shipments of scrap metal and paper arriving in China are inspected by officials of the Chinese Commodities Inspection Committee (CCIC), or organizations approved by the committee. BIR members may now apply with the CCIC for approval to conduct self-inspection of shipments bound to facilities owned by the same company sending the shipment. The BIR notes, however, that all shipments can still be subject to random inspections by the CCIC officials.

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