Throughout the past several years, it has become standard operating procedure for trade associations and larger corporations to allocate a portion of their websites to their positions on sustainability. In many cases, this website verbiage is a way to communicate a much larger effort by an industry sector or a company to adopt sustainable practices, while in other cases there may be an aspect of feeling obligated to acknowledge the concept of sustainability in some way.
Several of the trade associations that represent producers of the basic materials most commonly written about in Recycling Today mention sustainability on their websites, and often recycling plays a starring role. For people who make their livings recycling these materials, it can be heartening to see manufacturers pay respect to recycling.
A sampling of statements on recycling from trade associations representing producers of some of the most commonly traded secondary commodities follows:
Making decisions at GDB International Inc., New Brunswick, N.J., has never been a one-man show, says President Sunil Bagaria.
Bagaria, who has a master's degree in polymer engineering, certainly had plenty of industry knowledge when he began trading plastic scrap from his Brooklyn, N.Y., apartment in the mid-1990s.
Even in those early days, though, Bagaria, who hails from a family with a plastics industry background in his native India, tapped into the knowledge of some of those family members as he began building a company that now recycles multiple materials and employs some 180 people.
Looking back at 15 years of company growth and diversification, Bagaria is quick to credit the many people who have helped make GDB International what it is today.
A Ready Market
In the mid-1990s, the plastic scrap recycling sector in the United States was still, in some ways, trying to gain momentum. "Back then, plastic scrap was almost like a headache or a problem for manufacturing companies," recalls Sunil.
"Back home in India, our family had been in the plastics business for 30 years," he continues. "That's why I came here and got my degree in polymer engineering, which gave me an edge in identifying the right types of scrap."
Having customers in India willing to buy scrap was crucial, but the task of supplying them properly was far from easy. "In plastic recycling, you're either a hero or a zero," states Sunil. "If there is any cross-contamination, then what you have shipped is of no use. My background helped me make sure we were shipping the right things."
Within two years, Sunil and his brother Sanjeev (now CEO of the company) began shipping material to companies beyond the family business. He also started hiring people who would help his company (named GDB International in honor of his mother) to grow.
During part of the 1990s, Sanjeev also lived in New Jersey and helped forge relationships and lines of business that would be critical in GDB International's growth. "Sanjeev is the key reason, why our company has a presence in over 70 countries," says Sunil.
The brothers' second outside-the-family hire, after an office assistant, was Howard Schamach in 1995. "Howard had worked with a recycling company with whom we were doing some business," recalls Sunil. "It was a leap of faith, as they say, because we were just beginning to grow as a company."
Taking the leap seems to have paid off for both Sunil and Howard, as Howard now presides as senior vice president of the $100 million-plus company that the duo has helped build.
Howard is among a cast of people, including several Bagaria family members, who Sunil cites as key individuals who have "blessed" the company and helped it grow for more than 15 years.
"Sunil treats me as his brother," says Howard, "and he treats all employees as brothers, sisters, sons or daughters. I've seen it and I've lived it. He'll do without so someone else can have something."
Replies Sunil, "Our company would be nothing without the people and without our suppliers and customers. If we're not doing 100 percent for them, then I am a failure."
As GDB International has grown, Sunil, Sanjeev and their colleagues have been able to spread that philosophy beyond the plastics recycling sector and into several additional markets.
"Plastic was our foundation—our first product and still the core of our business," states Sunil. "But many of our customers began asking us about other materials, which is how we began recycling paper and then paint."
For a plastics recycler to begin handling paper (or vice versa) is a fairly common occurrence, but the venture into paint recycling has provided a distinctive niche market for GDB International.
"Paint we sort of stumbled upon in 1997," says Sunil. "Sanjeev went to a warehouse looking for plastic, and this warehouse owner said he has a lot of paint that was left behind. Sanjeev vowed to take it off his hands, so we took it out of his warehouse and brought it to a supplier's location who had some room," recalls Sunil.
Thus began GDB's learning process for how to handle paint and how to establish markets for clean, recycled paint.
"Paint is made by large companies, and like in any manufacturing process, things can go wrong," Sunil comments. "It's a batch process, and if something doesn't go right, they have scrap paint. Or for retailers with customer returns, they then have to dispose of it, and that volume can really add up."
GDB has subsequently established a paint collection and reprocessing center near St. Louis, in Nashville, Ill. "We pick the paint up at manufacturing plants or the distribution centers of retailers," explains Sunil. "We empty the paint into vats and the metal cans or plastic containers are recycled. The paint and allied products are currently marketed and resold to customers in almost 70 nations. Product like this made in the U.S.A. is desirable in many of these nations."
Continues Sunil, "Our Paint Division is one of the largest exporters of surplus, off-spec paint and raw materials in the United States. With Sanjeev's vision and guidance, GDB has become the leader in post-consumer paint recycling."
Adds Sanjeev, "With a focus on recycling and reusing paint, GDB keeps millions of gallons of paint out of the landfills of the United States every year with its recycling centers in the U.S., China and Mexico."
On the paper side, customers in India have asked for materials as diverse as cigarette paper or gift wrap paper. "We were able to source rolls of this material and bring value to their scrap rolls," says Sunil. "Now we have 3,500 metric tons of paper in the New Brunswick warehouse."
The New Jersey warehouse also is home to nonferrous metal scrap that GDB now buys and trades. "Many of our plastics, paper and paint customers generate metal as well, and certainly it's an established business," says Sunil. "I had a friend, Rajesh Dhir, with metallurgical knowledge who came on board and moved to New Jersey in 2003. He has helped lead our efforts in that sector."
Sunil and Rajesh knew each other from their engineering college days in Pune, India, and arrived together for university studies in the U.S. This long-term relationship and trust between friends facilitated a strong growth of the scrap metal division, says Sunil. "Rajesh was instrumental in actively expanding metal suppliers and selling domestically and overseas," says Sunil, adding that he "feels indeed blessed to have Rajesh standing by my side to take some burden off my shoulders."
Rajesh has expanded the metal division along with colleagues Mani Palani (export marketing) and Mohinder Bajwa (domestic sourcing).
Mani and Rajesh added staff in India and China to expand international marketing, says Sunil. "Rajesh tapped in to another school friend, Baljinder Sandhu, who is managing the sourcing in Midwestern region," says Sunil. "Parminder Bajwa is leading the sourcing in Canada and the Northeastern States," adds Sunil.
Rajesh calls Mohinder a "road warrior," and says suppliers praise his hard work and dedication. His colleague Adam Trusz "is tracking the pulse on scrap metal, ensuring supply and marketing is aligned well," adds Sunil.
"The export business requires rigorous documentation and payment collection process, which is where Hemant Thaker plays an instrumental role, along with Pradeep Sudalyandi, protecting GDB's financial interest," Sunil continues.
Sunil and his colleagues travel the world connecting these markets, with Sunil estimating that Sanjeev has travelled to some 60 countries. Still, Sunil says he has never lost touch with his family roots throughout that journey but instead has extended them.
Putting Others First
"Both of our parents never went to school; they came from a small town from a very big joint family of over 50 people," says Sunil, who also shares his belief that "our parents play a big role in who we become."
Sunil says his parents moved to a large city when he was a child. "My mother raised four sons and all have post-graduate degrees," he comments. "Sending us to college was a sacrifice for them. My mother made sure, though, that we got the message that if we didn't study, we would regret it. She'd point to laborers performing tasks and tell us that's where we would end up."
While Sunil says his mother encouraged her sons to believe they could achieve great things, "She also preached to be humble." Adds Sunil, "She would tell us that humility was a necessity in the journey, no matter what destination you arrive at or how well you do in life."
One of the ways staying humble manifests itself in how Sunil manages GDB is to be fully cognizant of the needs of others—whether employees or customers.
"If you have a dream, there always are people helping you achieve your dream," states Sunil. "Then it becomes your responsibility to help them achieve their dreams—and to do that while putting them first."
He summarizes the philosophy by saying, "If you're in a position to help, you're helping the people who are helping you. My dream of building this company can't occur without their help. What is there to think about?"
More than anyone else, Sunil credits his older brother, Dr. Surendra Bagaria, a cardiologist in New Jersey. "He came to this country in 1984. Under his tutelage, we went from a sleepy town in India to being starry-eyed at JFK airport and then learned what we need to do in America. He would take time away from his practice to help me figure out what I wanted to do," says Sunil. "In fact, it is only because of Surendra's dream and vision and his financial assistance that the company has reached a stage where it is now."
The company has celebrated moving into a new 101,000-square-foot building in 2011 (see sidebar "Moving In and Up" on page 36) and has ambitious plans for the future. But he also is willing to look back on what has already been achieved so he can thank the people who have helped along the way.
"We are fortunate, we've been blessed with the people who work with us, with great customers, and I've been blessed with a great family," says Sunil, adding, "The foremost thing we've asipired to do is to do business in an ethical way."
He also states, "The company is named GDB, my mother's initials, to honor her. We are who we are—all of us brothers—because of our mother. There is no other way around it."
Sunil concludes with an additional dedication to his and Sanjeev's famliies: "Last but certainly not least, none of this would have been possible without the unrelenting support of our families. We must take the time to appreciate and thank our families, who play an equally important role in our success."
The author is editorial director of Recycling Today and can be contacted at email@example.com.
|Björn Grufman, BIR president and Metallvärden CEO|
During the more than 20 years he has built Sweden's M.V. Metallvärden AB into an international scrap recycling and trading company, owner Björn Grufman has endured ups and downs.
The setbacks he has overcome include having a scrap yard figuratively stolen from under him in Russia. Grufman's ability to rebound, however, means he has rebuilt the company while also rising through the officer ranks of the Bureau of International Recycling (BIR), Brussels.
In both those roles, Grufman has been proud to watch the scrap recycling industry emerge from the shadows and back loading docks of the corporate world into a respected and prominent part of a global economy focused on sustainability.
Out of Thin Air
Grufman is a graduate of the Stockholm School of Economics who, prior to enrolling there, spent three years in the Swedish Army.
Upon graduating from the School of Economics, Grufman says, "I knew that I wanted to work internationally and was fortunate to begin working for SAS (Scandinavian Airlines)."
Tracking Scrap Usage
After setting a new record of around 1.4 billion metric tons in 2010, global steel production continued its climb in the first half of 2011. In comparison with the January-June period in 2010, world steel production increased in total by 7.6 percent to 757.8 million metric tons in 2011. The biggest increase was recorded by Turkey with growth of 21.3 percent to 16.4 million metric tons, and positive results also were posted by most of the biggest global steel producers, including China (up 9.6 percent to 350.5 million metric tons), the EU (up 4.1 percent to 93.4 million metric tons), the USA (up 4.3 percent to 42.7 million metric tons) and Russia (up 5.3 percent to 34.6 million metric tons).
As stated in the half-yearly report issued by the Bureau of International Recycling (BIR), it is also worthy of note that the increases in steel scrap usage in China (up 14.7 percent to 49.8 million metric tons), the EU (up 5.7 percent to 53 million metric tons), the USA (up 8.2 percent to 27.7 million metric tons) and Turkey (up 27.1 percent to 14.5 million metric tons) were greater than the respective upturns in crude steel production. The higher scrap consumption in China together with a decline in imports could be a first effect of the country's new Five Year Plan, which calls for the use of more scrap, and especially from domestic collections.
For Japan, it is interesting to note that the very small decline in steel scrap usage (down 0.3 percent to 19.1 million metric tons) was slightly lower than the decrease in crude steel production (down 0.9 percent to 54.1 million metric tons).
Part of what Grufman worked on was raw material shipping. "Someone there thought I would make a superb trader, so I pursued that and went to work for the Axel Johnson Group," Grufman says, referring to the trading house of a family-owned Stockholm-based conglomerate.
He eventually focused on iron ore trading and worked for the Axel Johnson Group until 1983. "The company had changed by then, and I felt it was time to leave," Grufman says.
Together with a business partner, Grufman started a scrap metal company that was centered on operations at the port of Murmansk, Russia. After building the business for five years, the duo was met with a challenge they did not see coming: "It was stolen from us," Grufman says of the scrap metal and the space from which the company had operated in Murmansk.
Russian judges and courts consistently ruled against Grufman and his partner's legal challenges, and the end result was a near-bankruptcy and a business partner too discouraged to continue in the industry. (Grufman credits his Swedish bank for being understanding of the situation, helping him avoid bankruptcy.)
Unlike his business partner, Grufman stayed in the industry, built upon the assets and goodwill remaining from his first business and began operating under the name Metallvärden (roughly "MetalValue" in English).
Grufman has concentrated on trading within Scandinavia, but he says that the creation of the EU and the euro zone has allowed the company to look beyond that. Also, the export markets of Asia have caused Metallvärden (www.Metallvärden.se) to greatly expand its reach. "Probably 25 to 30 percent of our sales are now to the Far East," he says.
In playing a role in the recycling industry beyond Scandinavia, Grufman says he has been helped by his commitment to the BIR. Within the organization, Grufman has served on committees and divisions and in officer roles of increasing responsibility, culminating in his role as president, which he assumed at the May 2011 convention. (See sidebar, "An Eager Ambassador," on the right.)
As a company, Metallvärden also has expanded beyond scrap trading. It now operates a melting facility that produces secondary aluminium alloys and ferro-titanium alloys. On the recycling collection and processing side, the company now also manages an electronics recycling plant in Stockholm.
A Diverse Portfolio
Grufman is quick to note that Metallvärden is not the largest scrap recycler in Sweden, being superseded by Stena Metall, which is as much as 10 times larger. But Metallvärden has taken several necessary steps to remain competitive, including accessing capital by going public in 2010 and by diversifying its operations.
Scrap processing and trading remains at the heart of the company's operations. Grufman says Metallvärden processes and trades about "10,000 metric tons of nonferrous scrap and from 70,000 to 100,000 metric tons of ferrous scrap monthly."
As much as 20,000 metric tons of the ferrous scrap goes to Metallvärden's ferro-titanium alloys production plant each month, still leaving a majority of that metal to be traded.
The company has been expanding the line of products it makes at its melting facility to include not only aluminum and ferro-titanium products but also lead bullion and semis. "I'm always trying to expand the value chain and getting into lead semis was a way to do that," Grufman says.
Metallvärden makes lead bullion that can be used to make bullet wire, which goes into ammunition produced in Scandinavia and in Germany. The company's lead products also are used to make lead sheet, lead antimony, anodes for chrome acid and lead shielding for the nuclear industry. "Using 1 millimeter of lead can block as much radiation as 30 centimeters of concrete," Grufman says, adding that the shielding is used at medical buildings and dentists' offices among other places.
An Eager Ambassador
Just three years after he entered the scrap recycling business full-time, Björn Grufman of M.V. Metallvärden AB, Stockholm, attended his first Bureau of International Recycling (BIR) event.
Grufman says he was made to feel welcome immediately, including by long-time members and officers such as Larry Sax, who currently serves as a Recycling Today Global Edition editorial consultant.
"Since then, I've been to most of the spring conventions and Autumn Round-Tables," he comments. After Sax encouraged him to become involved in the BIR's Nonferrous Division, Grufman got involved with the BIR as well as with the Swedish Recycling Industries Association, the former Nordic Recycling Federation and Eurometrec (European Metal Trade and Recycling Federation).
As he has advanced through the ranks of BIR and other organizations, it has allowed him to think about wider industry issues beyond the scope of Metallvärden's day-to-day business.
Among his observations:
The company's melting facilities are not in Stockholm but in the Swedish town of Lesjöfors, occupying space in a former steel mill building.
Metallvärden's trading offices are in Stockholm, as is the electronics recycling facility the company operates. The electronics recycling model offered by the company involves steps beyond what many other recycling companies offer.
"We are very much into computers," says Grufman. "Working on the front and back end, we can help deliver some 3,000 computer units ready-made to a customer over the weekend and take the old ones away."
He continues, "Second-hand computers—tested, working units—are today a big commodity in Eastern Europe and Northern Africa," adding that Metallvärden works closely with allies to ensure things are done in full compliance with international recycling and shipping standards.
"In collaboration with computer makers such as Dell, when a company is through with a lease, we work in close cooperation with all concerned. We keep them well informed about where the refurbished units are going," Grufman says. "A 3-year-old computer might be sold into Africa for about 80 euros. There also is a lot of scrap from this business; about 10 to 15 percent of the equipment is recycled at our plant."
Service at the Center
Despite considerable investments in processing and metals production, Grufman says that philosophically Metallvärden must bear in mind that it is a service company.
"We most often market ourselves as a service company," Grufman states, pointing to the corporate slogan "Expertise with responsibility."
On the expertise side, Grufman says, "We are trying to educate our suppliers to do the right thing and our customers how to utilize the products we have to offer them."
Knowledge or expertise is a two-way street, he adds. "Of course, knowledge is exchanged—they have things they can teach us. The R&D departments of aerospace companies or other consuming companies are tremendous storehouses of metallurgical knowledge."
Metallvärden is organized to pass along this knowledge, connect it with the application at hand and achieve maximum profitability for all involved. "Most of our staff are from the metallurgical industry," says Grufman. "We have a fairly deep knowledge of our customers' needs, and we know for them what is poison and what is not," he says of scrap consumers.
For scrap suppliers, "We may know that a certain alloy has extra value because of one key consumer. Our specialty is consumer knowledge to place the material at the right destination. Others may not look upon this material the same way nor add the value," he states, meaning they are not able to pay the best price to their scrap supplying customers. "If you can identify the alloying elements in some of your ferrous scrap, you can upgrade it."
On the service side, metallurgical service is one of the categories cited by Grufman, along with secondary raw materials collection and processing and price hedging. "We are active on the London Metal Exchange, so we can handle a form of risk that most of our customers cannot."
Additionally, Grufman says, "We provide transportation and logistics services and sometimes financing as well. Service is the central idea of our company, and that's the way we try to market it."
Directions to Grow
Grufman says he sees ways in which Metallvärden and the recycling industry overall can continue to grow in the near future.
Among the things he says he has been heartened by is a wider recognition of recycling during the previous 10 years or so.
"The recognition of our industry is very important," Grufman says. "In Sweden, everybody wants to be green—it's fashionable. In the last 10 years, other business owners have started to look upon us as a green industry, not as someone dirty who came in the night hours to pick up something akin to garbage."
He continues, "We are evolving from an industry that formerly served our clients without being seen. Purchasing managers formerly wanted our containers hidden in a corner and we had to come at night when it's dark. That has changed; now I have meetings with company directors of environment, and they want clean containers spotted near the main entrance, possibly billed as a 'recycling station.' They want full statistics of how much they've recycled for their sustainability reports."
This recognition has probably helped scrap materials begin to get declassified as waste within the Basel Convention framework, which has been a priority for the BIR for some 35 years, according to Grufman.
For Metallvärden, specifically, opportunity is presenting itself in a variety of forms. "Our company is likely developing more melting facilities," Grufman states.
He also envisions "deeper growth in Scandinavia, with Metallvärden becoming more of a Nordic company with a presence in Norway and other nations near Sweden."
Grufman adds, "I foresee that we must open up Eastern Europe. It will take some time before [some of the Baltic and Eastern European nations] are a significant home for scrap generators or scrap consumers."
Grufman says he is reaching an age where he hopes to back away from some day-to-day operations and step down from CEO to "more of an advisory role."
He concludes, "The next rung of managers are about 10 to 15 years younger, and strategically it's time to push them to take the initiative while I become more of an advisor than an active trader or administrator."
The author is editorial director of Recycling Today and can be contacted at firstname.lastname@example.org.
Moving into 2012, the copper market is giving no sign it will stabilize any time soon. Despite that, the pessimism that crept into the market throughout the fall of 2011 is giving way to a more upbeat outlook on the part of some observers.
Several reports issued in late 2011 point to a moderate recovery in copper pricing, as many of the challenges that clouded markets during the first three quarters of the year are starting to clear. Some of the more bullish speculators point to the progress that is being made in resolving the sovereign debt problem, which has spread through much of Europe, for the improving outlook.
Several analysts also say they feel that copper has fallen into an over-sold situation—meaning the price has fallen too far, too fast to be sustainable—and a strengthening in price and demand could take place by the end of the first quarter of 2012. The reported declines in copper inventories at London Metal Exchange (LME) and Shanghai Futures Exchange warehouses also may help to keep copper prices from falling further.
While several metals analysts are optimistic, it is far from a universal sentiment. Several copper scrap consumers still say they see significant challenges ahead. And, perhaps more problematic for this basic material, has been the failure of government and financial institutions to strongly address some of the fundamental problems that continue to plague the world economy.
One domestic copper scrap consumer says the metal is displaying significant volatility in terminal markets currently, with the trend toward the negative side. "It is putting pressure on margins and availability," he says. This environment, he adds, is making it far more difficult for his company to forecast very far into the future.
As a copper ingot maker, he says demand for his company's finished product is limited to domestic markets and the housing sector in particular. That reliance on the housing sector has been one of the big reasons for the less-than-robust recovery for the metal, he adds.
Tim Strelitz, president of California Metal-X, a Los Angeles-based brass and bronze ingot manufacturer, also is bearish. While optimistic about his company's future, he questions the validity of the global economic recovery. He says the quantitative easing approach (printing money, according to Strelitz) that Europe is taking will not likely be the cure for the continent's economic troubles. This approach, he claims, will keep the continent from seeing much in the way of economic recovery, muting any improvement in the copper market.
As for China, Strelitz says much of the copper that has been purchased during the past several years has gone toward speculative projects. This, he says, is something of growing concern for his company. Even as China continues to modernize its economy, Strelitz says he questions whether there is internal demand for many of these projects.
Adding to Strelitz' less-than-bullish outlook for China are recent statements by a Chinese minister that have helped to cast doubt on a strong rebound in the country early in 2012.
According to a report from Bloomberg News, during a recent metals conference, Wang Huajun, deputy secretary general of the China Nonferrous Metals Industry Association, said demand for copper, as well as for aluminum, could slow in 2012. "It is unlikely to see metals demand grow at more than 10 percent next year," Huajun reportedly said.
Customs data from China show that the imports of copper into China during the first 11 months of 2011 declined by nearly 10 percent.
In another Bloomberg News report, Wang Shouwen, head of China's foreign trade department within the Commerce Ministry, is quoted as saying that the country could face "severe" challenges in 2012.
Why is China such an integral component in the overall copper market? The most recent figures show that China consumes approximately 40 percent of all the world's refined copper.
While China's economic growth is slowing, it still outpaces economic growth in most other countries. The Organization for Economic Co-operation and Development (OECD) says China's economy will likely grow at a pace of approximately 8.5 percent in 2012. While still significant, especially in comparison with the U.S. and Western Europe, the OECD adds this would be the slowest growth the country has seen in 11 years.
More troublesome is that copper prices were softening toward the end of 2011, as the combination of a slowing Chinese economy and significant economic problems in Europe have resulted in sharply reduced demand and pricing for copper.
With the continued uncertainty in the copper market, Strelitz is one of many who say a good approach is to keep a limited inventory of copper on hand.
Copper markets saw significant downward adjustments through most of 2011. After peaking in early 2011, copper prices began to decline, with the price declining by nearly 25 percent by the end of the year from its peak.
The continuing problems with the U.S. housing sector, which is a significant consumer of copper, also contribute to declining copper markets. Several sources say they do not expect to see a robust recovery in copper markets until there is more clarity within the U.S. housing sector.
Despite these challenges in the short term, the price of copper could be in a temporary trough and a recovery could take hold. According to a recent survey by Bloomberg News, for the first time since the fall of 2011, traders are expressing optimism about commodities markets, including copper.
A Glimmer of Hope
A key reason for the improved outlook for copper has been the sharp decline in copper inventories. Bloomberg News reports that Asian copper inventories as monitored by the LME have dropped by almost 70 percent since June 2011. Additionallly, the Shanghai Futures Exchange reports that copper inventories it tracks are at their lowest levels since July 2009.
Although Chinese government officials have been attempting to slow economic growth in the country, statistics show that imports of refined copper to China have picked up toward the end of 2011. Recent figures from the China General Administration of Customs shows that refined copper imports for November 2011 increased by nearly 50 percent compared with figures from the same period in 2010.
As gloomy as the U.S. housing market has been, there are some preliminary signs that it may have hit a bottom. A recent report from the U.S. Commerce Department shows that November 2011 new housing starts were the highest they have been in 18 months.
Another signal copper markets may find firmer footing in 2012 is the tighter supply being seen right now. Strikes at a number of copper mines have reduced the overall supply of copper.
One factor that may be playing a role in copper's strength in China has been the move by some to use the metal as collateral for loans. With Chinese banks tightening their lending practices, several sources have reported that companies are using copper as a form of collateral.
The most recent figures from the International Copper Study Group (ICSG) show a small production deficit of 13,000 metric tons of refined copper. However, when making seasonal adjustments for world refined copper production and usage, September showed a surplus of 18,000 metric tons. The apparent refined copper balance for the first nine months of 2011, including revisions to data previously presented, indicates a production deficit of 170,000 metric tons (a seasonally adjusted surplus of 33,000 metric tons). This compares with a production deficit of 429,000 metric tons (a seasonally adjusted deficit of 210,000 metric tons) through September 2010.
During the first nine months of 2011, world apparent copper usage grew by 1 percent compared with the same period in 2010. Although Chinese apparent usage grew by 9 percent in the third quarter of 2011, consumption in the through September was 0.5 percent less than the same time in 2010, as reflected by lower net imports in the first half of 2011.
In the European Union, Japan and the United States, usage weakened as the year progressed, with usage in the third quarter falling by 8.6 percent in the EU, 12 percent in Japan and 4.9 percent the United States compared with figures for the third quarter of 2010. In the first nine months of 2011, usage in these three regions declined by 0.5 percent, 3.8 percent and 0.3 percent, respectively. World usage without these four major users increased by 5 percent, primarily owing to a 72 percent increase in the Russian Federation and a 7 percent increase in India.
The author is senior editor of Recycling Today and can be contacted at email@example.com.
Recycling has long been a part of Alcoa's history as well as that of the aluminum industry's in general. Kevin Anton, chief sustainability officer of the Pittsburgh-based company, says, "It is a very significant part of our business."
The importance of recycling to Alcoa's business has prompted the company to invest in many initiatives in the last year, including taking a stake in Fresno, Calif.-based Electronic Recycling International (ERI), upgrading its Tennessee can reclamation facility, constructing a new facility in Ohio to recycle truck wheels and constructing new recycling furnaces in Spain. "We are putting capital in the ground to be able to increase our usage of scrap and, at the same time, taking efforts to increase the supply side of scrap, particularly the can. It is pretty fundamental to who we are," Anton says.
In the following Q&A with Recycling Today Managing Editor DeAnne Toto, Anton discusses Alcoa's investment in ERI and the growth potential of the aluminum industry.
Recycling Today (RT): Alcoa took a stake in ERI in 2011. What made the company an attractive investment? What does Alcoa hope to gain through its relationship with ERI?
Kevin Anton (KA): If you think about consumer electronics, you often have products that have life cycles of less than two years. You start to think, "How can the world allow products that are so prolific and that have such a short life cycle and not have a proper end-of-life solution for them?" We see consumer electronics as being a great growth market for aluminum because of the recyclability plus the attributes that aluminum brings to the product. It's got great consumer appeal through the look and the feel, but also the thermal properties of aluminum help the designers manufacture the product smaller, thinner, lighter, and the heat dissipation properties of aluminum help the designers manage the heat from the circuitry. It is a real win-win.
Just like when we helped establish the market for the aluminum can—we are the leader in that market—we recognized that there was a need to create closed-loop recycling and get the cans recovered, and we built the infrastructure to do that. The analogy here is that we are helping establish the infrastructure to bring that aluminum back in a closed loop and make sure it doesn't go into landfills.
As we started looking in this space, we wanted to find a company that on a values basis and in terms of growth ambitions lined up with Alcoa. I met John Shegerian at ERI and immediately there was a mix of cultures and a mix of values. We saw a successful entrepreneur who had the ability to grow his business exponentially and we saw that Alcoa could help him do that.
RT: What role will Alcoa play in helping ERI expand its electronics recycling technologies?
KA: What we can help them with after they recover the aluminum is how they can sort it and package it to get maximum value.
We are helping them with capital. We are helping them with management systems. As the company grows, its span across the country will be greater. We can help them learn how to manage remotely, learn how to manage seven facilities versus two facilities and how to leverage management capabilities across the country. They are a very capable management team that can learn bits and pieces from Alcoa because we have already gone down these paths.
I sit on the board of directors of ERI. It is a great group of external directors with diverse backgrounds. All of the directors bring unique talents, contacts and experience to help John drive the business to where it needs to get to.
RT: When you talk about sorting and packaging the aluminum to get maximum value, are you talking about identifying the many grades of aluminum and segregating material based on grade?
KA: Yes. It is about helping them package it up so that you keep the cast, the extrusions and the sheet separate from each other so they will have more value to the ultimate remelter. By simply making sure the back panels from LCDs don't get mixed in with the heat sinks from PCs, for example.
RT: Have you arranged to be the primary recipient of material from ERI? Or will ERI put that material on the open market for sale?
KA: We have an arms' length relationship with ERI. Some of the aluminum that they generate will naturally fall to Alcoa because we'll have the best logistics and the best use for it. Other places, for example, their Fresno facility, Alcoa doesn't actually have anything all that close to Fresno where we could be using the material, so that aluminum most likely will end up in the free market.
I think "coordination and cooperation" is the right way to phrase it.
RT: Will Alcoa have a role in ERI's expansion of its footprint in the U.S. and abroad?
KA: Yes. The focus today remains expanding in the U.S. and opening new, expanded facilities in the Annapolis (Maryland) area, in the Boston area, in North Carolina—the North Carolina site actually happens to be an old Alcoa site and we are actually the landlord, too. We are helping with some management expertise. Our equity contribution when we bought into ERI obviously helps fund this.
The next step will be to start to look overseas. But there is an awful lot involved in next 12 months in getting three facilities ramped up in the U.S. at the same time. That is what John will be focusing on. Then we will start looking overseas—India, the Middle East, South America. There are lots of opportunities. I think we will go where the core strengths are for us and ERI. ERI has already built some great relationships in India. The other two locals are where Alcoa has an expanding presence.
RT: Does Alcoa have similar investments in the electronics recycling industry or other areas planned?
KA: At this point in time, this is a population of one. We've looked around and we see that ERI does has the ability to go international at the right point in time, and this will be our investment vehicle for e-waste.
RT: Are there other industries that present similar opportunities as the e-scrap industry?
KA: Not as of now. But we will continue to keep an eye on emerging trends and, if there is a void to be filled, I think we are very comfortable stepping into that.
When you think about it, electronics is a brand new industry for aluminum. There wasn't a great recycling loop there and it needed some help. I think it was very appropriate for Alcoa to join in.
RT: What is prompting the increased use of aluminum in devices like laptops? How do you expect this to affect your business in the near term?
KA: We see double-digit growth in aluminum going into electronics for the foreseeable future. I talked before about the mechanical properties and the look and the feel of aluminum; it is exciting from the consumer standpoint. But, really, the recyclability is key. Think about a plastic-based laptop or cell phone. Even if it gets recycled, the plastic is going to get chopped up, there are not a lot of good uses for that plastic, frankly. ERI has a policy of not landfilling. We basically sell everything that we generate at ERI; but, often you are almost giving away the plastics because there is no other use for them. John Shegerian dubbed plastics as the permanent problem—there is no good answer for it—versus aluminum, which is infinitely recyclable.
The soda can is the best example. A soda can go back on the shelf 60 days after it goes into the recycling bin with no loss of properties and can be infinitely recycled. As consumer awareness increases and extended producer responsibility regulations increase and the consumer electronics manufacturers are facing the higher disposal costs for plastics versus the aluminum, they will continue to drive the designers to use more and more aluminum in the product.
We are very excited about this market.
RT: What end markets present the most growth opportunity for Alcoa in the next five to 10 years?
KA: Electronics is a great growth market. We love aviation, and the aviation market is going through a great resurgence. We are well-positioned to serve that market with new proprietary alloys.
We are very excited about the automotive opportunities that are in front of us. We see aluminum as the most cost-effective way to meet the new CAFE (Corporate Average Fuel Economy) standards—witness the investment we just made in our Davenport (Iowa) rolling mill directed at the transportation market. There are great opportunities there. Aluminum really is going to drive the next generation of automotives. We know that car makers know the technology. It has been a little bit more nitch-y in the past with some of the higher-end cars, but there is no reason the technology can't be deployed in a broader way. That is what we are counting on, and we think we have the solutions. We are very excited about this space.
Aluminum can growth in this country is fairly flat. But if you look around the world—be it Russia, be it the Middle East, be it South America—there is double-digit growth in aluminum cans. With our global footprint, we will be positioned to take advantage of that too.
Kevin Anton is chief sustainability officer of Pittsburgh-based Alcoa. Anton is based out of Knoxville, Tenn., and was a past chairman of the U.S. Aluminum Association.