A proposed ban on all disposable plastic bottles on the campus of a Canadian university has grown out of the student union’s campaign to ban bottled water at the school.
The student union at Thompson Rivers University, Kamloops, British Columbia, has collected more than 2,500 signatures in support of its proposed ban on drinks in plastic bottles as of mid-November, according to an article in the Kamloops Daily News. The group’s sustainability crew is scheduled to go before Thompson Rivers University board of governors in December, at which time the organizers of the ban say they hope to have 4,700 signatures.
“Everyone’s still going to be able to buy their beverage of choice, just in more sustainable containers, things like aluminum cans, glass bottles, fountain drinks from dispensers,” Dylan Robinson, a member of the student union, told the Kamloops Daily News.
Of course, whether all of these options are truly more sustainable is up for debate. While few people would argue with the sustainable nature of aluminum cans, glass recycling is not without its challenges. And what kind of cups will those fountain drinks be poured into?
The ban also does not take into account advancements such as Coca-Cola’s PlantBottle, which the Institute of Scrap Recycling Industries Inc. (ISRI) recognized in 2010 with its Design for Recycling Award. The PlantBottle is a PET (polyethylene terephthalate) bottle made through a process that turns sugar cane and molasses into a key component for PET plastic that is fully recyclable back into food-grade containers, according to Coca-Cola.
When it comes to sustainabilty, the best choice is not always the clear choice, and bans have the potential to create unintended consequences.
In Recycling Today’s list and map of certified electronics recyclers (“Status: Certified,” p. 55) in the September issue, Affinity Information Management, Toledo, Ohio, should have been included as an R2 (Responsible Recycling Practices) certified company. We apologize for the oversight.
|Randy Schlipp, Ryan Schlipp, Gale Schlipp and Nick Schlipp of Indiana Metal Group, New Carlisle, Ind., before the auto shredder at IMG’s subsidiary 360 Degree Metal Recycling, also in New Carlisle.|
Randy Schlipp, president of Indiana Metal Group (IMG), headquartered in New Carlisle, Ind., is serious when he says he is willing to go the extra distance to stand out from his competitors. For instance, when the company decided to add its first auto shredder, rather than hire a contracting crew to build the shredder and downstream system, Randy, his sons Nick and Ryan Schlipp and his son-in-law, Chad Medlin, worked around the clock to do the job themselves.
IMG operates a number of subsidiary companies, including Gertrude Street Metal Recycling, South Bend, Ind.; Bulldog Auto Parts, South Bend; Going Green Metal Recycling, Cicero, Ind.; Going Green II Metal Recycling, newly opened in Kokomo, Ind.; and Randy’s Metal Recycling, Eau Claire, Mich. While these locations also handle and process nonferrous metals, they act as feeder yards for IMG’s newest company, New Carlisle-based 360 Degree Metal Recycling, its first auto shredding operation, which opened in September 2012.
Randy is the third generation of his family in the metals recycling industry. He is joined by his sons, who began their careers outside of the family business. For Nick, vice president of IMG, that meant working as a computer technician for several years.
“I couldn’t stand working inside,” Nick says of his previous job.
Like many traditional family-owned businesses, Randy started in the industry working for his grandfather’s auto parts company, Five Corner’s Garage, in Michigan. As time went by the company added other services.
In 1995, Randy took over his grandfather’s business. In addition to expanding the company by adding new locations, he invented equipment, including an oil drainer that he calls the Auto Tap, which Randy says would help to make the company more environmentally friendly.
Gale Schlipp, Randy’s wife (while separated, she still works at the company), has done all the accounting and payroll for IMG from day one and was later joined by Nick’s wife, Jennie.
Gradually, IMG moved into the auto crushing side of the business and currently operates six car crushers.
With the growing amount of material it was handling and growing competition from larger scrap metal companies, Randy says he needed “to get big, get bought out or go out of business.”
He decided to go big and, with the support of his family, to build an auto shredder at a new facility in Michigan.
“I was concerned about getting cut off from our supply of scrap,” Randy says of the decision to add the auto shredder. “The last piece of the puzzle was the auto shedder. We needed that to secure our future. Lots of smaller family companies’ yards were dying off or being acquired by larger companies. You have to become a larger company, sell to a larger company or be forced out.”
Randy says when he got into the business of crushing cars in 1995, 2,500 cars equaled a big job. Now, he says, 500 cars amount to a big job in light of the growing competition among recyclers for material to process.
In addressing the issue of auto shredder overcapacity, Randy hesitates. While there may be an oversupply, he says the company’s four feeder yards will help to steadily supply its shredder. Additionally, Randy says, IMG is willing to pick up material, including auto hulks.
Adding to the challenge of being a small, family-owned company competing against a number of large national scrap processing companies, he says, is that any time the small companies start making money, investors and the big guys enter that market.
“We are one of the few mom and pops out there,” Randy says.
While Randy originally made the decision to purchase and install an auto shredder roughly three-and-a-half years ago, finding a location for the shredder presented challenges. The initial planned location was Benton Harbor, Mich. However, partly because of the negative publicity being generated by the former Sturgis Iron & Metal mega shredder in nearby Elkhart, Ind., area residents were vocal in their opposition to IMG’s proposal. Despite the fact that IMG’s proposed auto shredder was far smaller than Sturgis’ shredder, opposition was intense.
A Closer Look
The automobile shredder and downstream sorting system at 360 Degree Metal Recycling, New Carlisle, Ind., includes:
Randy says, “Sturgis Iron and Metal made it difficult for our project. Because they built a shredder too close to homes, it seemed to be on the news every night.” He adds, “No one understood that our shredder was different.”
Even though IMG’s proposed auto shredder was to be built in an area zoned for heavy industry in Michigan, the project was turned down. However, Randy says that in hindsight he is grateful that the shredder wasn’t approved. “If you draw a 60-mile supply radius around the proposed Michigan site, part of our supply area would be in Lake Michigan.”
After learning the community of Benton Harbor rejected the company’s proposed auto shredder, Randy says he considered locating the shredding operation in South Bend. Despite opposition from some residents, IMG eventually received approval to build the auto shredder in that Indiana city.
In an effort to clear up misperceptions that critics may have held about the shredder, Randy says he rented a Greyhound bus to take interested parties to a shredder operation that is similar to the shredder the company was proposing. “We took them to Franklin Iron & Metal in Dayton, Ohio,” he says. “We changed a lot of minds when we went there.”
Despite the support from the South Bend community, IMG eventually opted to locate its auto shredding operation in New Carlisle.
IMG has demonstrated its willingness to take a different approach to the scrap recycling industry. When it came time to install the shredder, for instance, the Schlipp family didn’t contract a crew for the project. Instead, Randy, Nick, Ryan and Chad opted to assemble the shredder, as well as the downstream sorting system, themselves.
Randy says, “We were all a part of the construction of the shredder. We hired a building group to manage the project, but the whole time we said we were going to assemble the machine [ourselves].” He adds, “There were foremen in the company who had doubts. They tried to talk us into having riggers and ironworkers do it.”
Nick adds that IMG hired Prime Construction Services, Vicksburg, Mich., to take bids on some parts of the project, including pouring the concrete, though the Schlipps were committed to installing the shredder and the downstream systems themselves.
“We assembled the box, which took us about five days,” he says. “It took us a week to put the infeed conveyor in. They told us we needed to get two-thirds of the downstream installed quickly to keep on schedule. We worked around the clock. And it took us a total of eight days, 24 hours per day, to put in the downstream in,” Nick adds.
Why the do-it-yourself approach?
Randy is quick to reply: “By assembling the shredder, we know each and every part of the shredder and how it works. By having our employees build the shredder, everyone knows how to repair the system,” he says.
The Schlipps’ hands-on approach is not limited to building the shredder.
“You can find my dad in the crane more than any office,” Nick says.
“The employees have a lot of respect for him because he isn’t one of those guys who sits in an office and looks out the window.”
Embracing environmental stewardship is another of IMG’s hallmarks. While many scrap metal dealers have embraced “green consciousness” in recent years, Randy says it has been a part of his company’s DNA from the beginning. In fact, Randy says he attempted to discourage his sons from entering the family business initially because of the industry’s somewhat questionable environmental record.
Demonstrating early on his interest in running an environmentally safe operation, Randy says he invented and marketed the Auto Tap, an auto fluid removal station that focuses on the fast drainage of auto fluids. It is designed to protect the environment and employees from the hazards often associated with removing flammable and other hazardous fluids from scrap vehicles.
Randy also invented the Ironsides trailer cover system, a four-walled steel containment device used to haul crushed automobiles.
He markets the Ironsides and Auto Tap through 360 Degree Resource Inc.
IMG has taken efforts to keep its environmental philosophy front and center in its daily operations. Randy says it was a foremost thought when planning the company’s auto shredding facility. “I sat down with my sons to see what we could do about protecting the environment,” he says of planning process for one of IMG’s newest locations.
The Schlipps say they wanted the site to be the most environmentally safe shredding operation in the country. The site features a seven-layer liner designed to catch any fluids that might seep through cracks in the yard’s pavement. The property’s 18 acres are paved using either concrete or asphalt. Nick says, “We have a double fail safe,” noting the liner and the 9 to 11 inches of concrete or asphalt at the site.
360 Degree Metal Recycling also has a retention pond to treat stormwater runoff. Nick says he is very proud of this feature, which includes a system of filters and screens designed to ensure that all of the water that is not recycled to cool the shredder is held in a pond. Because of the degree of filtration, Nick says the water in the retention pod is almost as clean as drinking water before it is discharged. “By doing that, we can file exemptions for our stormwater runoff permit because we control it all,” Nick says.
Randy says in the past recyclers were not as focused on protecting the environment as they are now. “They used to not worry about the fluids,” he says. “We need to do what’s right, and I think we have done that above and beyond.”
This approach may make IMG and its 360 Degree Metal Recycling subsidiary environmental leaders in the industry. However, in a market where scrap recycling companies are competing for a dwindling supply of material, IMG has to be creative to obtain enough material to meet its needs.
While many scrap metal dealers may commiserate about the decline in scrap generated by industrial sources, IMG tries to avoid the sector altogether. “We don’t pursue a lot of the industrial accounts,” Randy says. “We do more of the labor-intensive jobs. We provide companies with a whole different level of service that national companies don’t want to do themselves,” he adds.
Nick says IMG has sought out other sources of material. “We have gotten into demolition work—scrap metal demolition and building demolition,” he says. “And as far as nonferrous metals, we started purchasing nonferrous 10 years ago to supplement the ferrous [business] when it was slow. It is now 40 percent of our business.”
In addition to aluminum, the company accepts other nonferrous metals in an attempt to diversify its business. Nick says IMG added copper wire granulation in 2008 at the company’s Eau Claire yard.
Attention to customer service is another way IMG can attract material, the Schlipps say. For instance, Nick says, when crushing cars at customers’ sites, the company takes care to clean up after itself. IMG also monitors and cleans its own sites, which helps to prevent damage to customers’ vehicles while visiting the company’s yards, he says.
“Dealers say that at some shredders in the Chicago area it may take a long time to unload from a truck,” Nick says. “They can’t compliment us enough about the easy flow of traffic from our site. They want to know what they can do to get more scrap out to our yard; they can get out faster, with fewer equipment repairs.”
These steps may give a small company a modest edge, though Randy and Nick say they still have to work smarter and better to compete.
“The biggest advantage we have is we are a smaller group,” Randy says. “We don’t have to come up with as much money for payroll and expenses every month. We are hands-on. You can find me in the crane. Nick, too. Ryan is often operating the shredder. We give family-type service. We don’t have to earn as much to pay the bills.”
The author is senior editor of Recycling Today and can be contacted at firstname.lastname@example.org.
Randy and Nick Schlipp discuss 360 Degree Metal Recycling’s new auto shredder in New Carlisle, Ind., in a video interview at www.RecyclingToday.com/360-degree-metal-recycling-indiana-auto-shredder-video.aspx.
When asked to provide a summary of North American scrap markets for a November recycling conference in China, Michael Lion of Sims Metal Management Asia Ltd. chose the word “challenged.”
The crux of the challenge, according to Lion: “Too little scrap being chased by too many people.”
Across many recycling markets and throughout most of 2012, the enduring challenge for recyclers was finding enough scrap materials.
Mixed in for many recyclers (especially those in the paper sector) was temperamental price volatility and hiccups in demand that combined to create a year that, while not among the worst, also did not present the post-2008 rebound that many in the industry were hoping to see.
On Low Flame
Judging by steel production rates in the United States and globally, the ferrous scrap market remained one where furnaces were melting enough scrap to keep demand healthy (and prices in the $350 to $400 per ton range).
On the demand side of the ferrous scrap equation, steel output has been on a largely upward trajectory since the U.S. economy reached its low point in late 2008 and early 2009.
At the end of 2008 and in early 2009, steelmakers and the scrap processors who serve them experienced historic drop-offs in business, according to figures from the American Iron and Steel Institute (AISI), Washington, D.C.
AISI figures show that U.S. mills in one week in mid-February 2008 produced 2.1 million tons of steel and the capability utilization rate was 91.6 percent. Twelve months later, in the week ending Feb. 14, 2009, production was slashed in half, with slightly more than 1 million tons of steel being made. That represented a capability utilization (mill capacity) rate of 45.4 percent.
Throughout the rest of 2009 and into 2010, the weekly output and capacity rate figures climbed their way back up. By April 2012, output was just shy of 2 million tons and the capacity rate was just shy of 80 percent.
The summer and fall of 2012 saw the introduction of some negative influences, with pre-election uncertainty cited by many analysts and pundits as the reason for a manufacturing slump that affected steel output.
In the week ending Nov. 10, 2012, domestic raw steel production was 1.74 million net tons at a capability utilization rate of 70.7 percent. This was down from the 1.81 million tons produced in the week ending Nov. 10, 2011, when the capability utilization was 73 percent.
Also in mid-November, the AISI reported that for the month of September 2012, U.S. steel mills shipped 7.23 million net tons of steel, which was a 13.7 percent decrease from the 8.37 million net tons they had shipped in the month of August 2012. The figure also marked a 9 percent decrease from the 7.95 million net tons shipped in September 2011.
Export markets have continued to soak up their share of scrap in 2012. Turkey, the single largest export destination, produced more than 30 million metric tons of steel in the first 10 months of 2012, according to the WorldSteel Association, Brussels. This was up from 28.1 million metric tons in the same period last year and just 23.8 million metric tons produced in the first 10 months of 2010.
Those markets could be even more strained if the steel industry in China follows the wishes of some of the country’s central planners for a more “circular economy.” Professor Wang Yangzu of China’s Ministry of Environmental Protection, speaking at the Electronics Recycling Asia conference in Guangzhou, China, in November, said Chinese leaders were concerned that the country’s steelmakers use scrap as only 14 percent of their steelmaking feedstock, while steelmakers in European and North American nations use from 58 percent to 83 percent scrap.
China’s 14 percent rate amounted to 80 million tons of ferrous scrap melted in 2011, according to Wang, who added that China “plans to reach 200 million tons [melted] in the future.”
While some of the demand signs are encouraging, scrap processors reported throughout the year that lackluster construction and demolition work levels continued to hinder scrap flows. Many processors also decried the continued introduction of more shredder capacity in the United States (See “Too Much of a Good Thing,” p. 76 in the October 2012 issue of Recycling Today.)
The competitive shredder market in many parts of the country has resulted in plants running at just 20 percent to 50 percent of the number of hours they may have operated in 2007 or early 2008, according to some sources.
Still Glowing Red
While supply and demand factors caused several $50-per-month price swings in the ferrous scrap market, nonferrous traders continued to ride the roller coaster caused by several metals (but copper in particular) being investment products on the commodities market.
On the London Metal Exchange (LME), copper traded for as much as $8,655 per metric ton ($3.97 per pound) in February before falling to its low, thus far, of $7,251 per metric ton ($3.32 per pound) in June.
Fundamentally, copper-bearing scrap remains in demand, particularly in China, where annual copper production figures continue to climb.
At the 2012 CMRA (China Nonferrous Metals Industry Association Recycling Metal Branch) Recycling Metal International Forum in Beijing in November, Hank Qiu, a senior consultant with the China branch of the New York-based International Copper Association (ICA), noted that some 22.1 million metric tons of copper were consumed globally in 2011, with nearly 30 percent of that (9.75 million metric tons) consumed in China.
For the past 15 years, both state-owned enterprises and entrepreneurs have been furiously adding copper production capacity—much of it secondary copper production—to keep pace with that consumption.
As China embarks on its 12th Five-year Plan in 2013, more metals production is forecast, with sustainability initiatives such as the “circular economy” and “scientific development” favoring the ongoing use of scrap materials.
Industry analysts and reporters in the financial press, however, are beginning to wonder whether some Chinese building and infrastructure projects are beginning to outpace the actual growth in China’s middle class and urban migration.
Reports of “ghost cities”—entire residential and retail complexes without tenants and with rents set too high to realistically attract any—have caused some concern. Analysts point out that such complexes also exist in Spain, a country where banks and the economy ultimately suffered from such miscalculations.
Media organizations such as Bloomberg News also have been tracking what is being referred to as “shadow banking.” In China, this has taken the form of guaranteed-return trust funds with portfolios heavy on real estate. According to a mid-November Bloomberg.com news article, trusts “make up more than a quarter of [China’s] estimated $3.35 trillion in non-bank lending,” a UBS economist says.
Some of these trusts “are facing repayment risks,” the article continues. “As many as 15 percent of the nation’s $89.8 billion of property-linked trusts that come due by the end of 2013 may default, according to brokerage firm China International Capital Corp.”
Buyers and sellers of copper-bearing scrap will be watching closely for signs that the Chinese economy can navigate through these concerning issues.
Nonferrous scrap generation, as noted by Sims Metal Management’s Lion, remains a challenge for scrap processors. While sophisticated downstream auto shredding systems and ramped up electronics recycling capacity are helping to recover more copper-bearing scrap, reduced construction, demolition and renovation activity means less red metal is coming across scrap yard scales.
Just as metals traders experienced ups and downs in 2012, recyclers and traders who deal in scrap paper and plastic can look back on some difficult stretches.
Scrap paper markets took a plunge in pricing in the summer and early fall months in particular, with recyclers citing the disappearance of export orders as the leading culprit.
A combination of customs-related clog-ups at Chinese ports as well as production curtailments in China and North America caused what many perceived to be a demand-side price drop.
Supply throughout 2012 was seldom described in North America as anything better than “steady” and often referred to as “disappointing.” Newsprint and the old newspapers (ONP) grade continue to struggle, while printing and writing paper production and office grades scrap supplies also are languishing.
For several years, the Chinese export market has been the sponge to absorb recovered fiber, and the boxes in which China exports finished goods have been a steady source of supply.
A September 2012 presentation by Cao Zhenlei, the secretary general of the China Technical Association of the Paper Industry (CTAPI), pointed to the potential of limits being reached in China’s ability to keep absorbing scrap paper.
Cao said that while recycling remained part of the “guiding ideology” of China’s 12th Five-year Plan, so did a paper industry “changing from big to strong.”
He said China’s newsprint industry had “entered a steady declining period” and that printing and writing production capacity also was “in a difficult period.”
Contrarily, Cao said packaging paper and board “still has development opportunities” and finding new uses for paperboard in China “has remarkable potential.”
China’s tissue mills could offer another growth area for fiber, Cao said, since “domestic per-capita consumption still can be elevated.” He added that in 2012 and 2013, tissue production capacity would be increased “intensively.”
Plastics recyclers experienced a summer swoon in pricing as well, though demand for high-volume grades such as No. 1 PET (polyethylene terepthalate) bottles remained strong, according to sources.
Virgin production that exceeded demand was cited by these same sources for the price drop, but demand from domestic PET consumers has remained steady. As with recovered fiber, customs back-ups at Chinese ports made the shipment of some grades of plastic scrap difficult throughout much of 2012.
The firming of markets for engineering-grade plastics used by consumer electronics producers continued in 2012. Even as PET and HDPE (high-density polyethylene) prices drifted down in the summer, the biggest problem with engineering plastics such as ABS (acrylonitrile butadiene styrene) was finding enough to fill orders. “It seems like there is no ABS out there,” one trader told Recycling Today in July.
On the export side, Kingfa Sci. & Tech. Co. Ltd., based in Guangzhou, has risen in less than two decades to become the fourth largest plastics producer in the world, says Steven Tan, an associate director in the company’s circulation economical project department.
Tan said Kingfa will produce as much as 2 million metric tons of plastic in 2012. While much of that is virgin production, he said the company will produce 150,000 to 160,000 metric tons of recycled-content plastic using about 100,000 metric tons of plastic scrap.
Whether they most commonly ship just across the county line or across the Pacific Ocean, recyclers will benefit if company’s like Kingfa continue to seek large volumes of scrap.
The author is editorial director of Recycling Today and can be contacted at email@example.com.
Copper scrap markets have been under significant downward pressure during the second half of 2012. Dealers of copper scrap point to many factors for the decline, including general uncertainty in the global economy. As a result, many scrap dealers are bearish about the next several months.
Copper scrap consumption is driven primarily by China. The country’s economy has grown at double-digit rates through much of the past 10-plus years. More recently, however, China’s economic growth has slowed, particularly in the second half of 2012. While still growing in excess of 7 percent, China’s slower economic growth is affecting a number of commodities, including copper scrap.
In other parts of the world, while opinions are mixed regarding the relative health of the U.S. economy, the consensus seems to be that much of Europe may slip into recession.
With a tepid global economy, the spark that is needed to boost copper scrap markets is missing.
In early November, the copper scrap market hit a rough patch, with prices dropping significantly. “Mills are not taking orders through the end of the year,” one scrap dealer says. “China is not active, as their mills are scaling back.”
A scrap dealer who ships to both domestic and offshore consumers says copper scrap markets likely will remain flat until the end of the first quarter of 2013. “Nothing will happen until March (2013),” he speculates.
All eyes are on China currently, as the country transitions to new political leadership. Given this change, that country’s copper scrap market may not pick up until after the Chinese New Year, which is Feb. 10, 2013.
China is the world’s largest consumer of copper, taking in more than half of the world’s copper. This includes copper cathodes as well as copper scrap.
However, the slowdown in the growth of the Chinese economy translates into less construction, less manufacturing and reduced demand for raw materials, including copper and copper scrap, than in previous years.
The Chinese government has initiated a stimulus package designed to return the country to the growth rate it has seen in recent years. The measures China’s new administration takes to strengthen the Chinese economy will go a long way toward setting a medium-term outlook for copper scrap. However, the impact of this stimulus package on copper consumption has not been determined as of yet.
According to a recent article in The Wall Street Journal, inventory of copper cathodes stored at bonded warehouses in China have soared. Judy Zhu, an analyst with London-based Standard Chartered, tells The Wall Street Journal that the copper overhang had grown to about 600,000 metric tons in late summer, up from 500,000 metric tons in June 2012. Zhu and other analysts with Standard Chartered also “project the stockpiles will have since grown due to long-term purchase contracts. By comparison, London Metal Exchange warehouses reported 214,650 tons,” the article states.
The WSJ article adds that new imports of copper products into China have been going straight into storage rather than being shipped to manufacturers, reflecting the overall lack of demand for the metal in that country.
A U.S.-based nonferrous scrap metal exporter says China will likely be a weaker importer of many metals in the coming year, as there will be less construction activity and a general slowdown in the growth of the Chinese economy.
However, some market speculators say they feel copper markets may be poised to strengthen, as the new Chinese government administration could take aggressive steps to improve the country’s slowing economy.
Brian Riley, sales manager for the U.S. division of the large European-based copper producer KME Group, agrees that the market for copper during the next six months will hinge on how China’s economy responds to the government’s stimulus program.
Other factors also have been weighing on copper pricing. Chile has reportedly been exporting more copper concentrates, which are used to produce refined copper. This puts more metal on the market during a time when buying has eased back, at least in the short term.
A U.S.-based distributor of copper products notes that while copper production domestically has steadily declined, it is holding on in Europe.
SEC Mulls J.P. Morgan’s Copper ETF
J.P. Morgan, New York, has been seeking to introduce a copper exchange-traded fund (ETF), known as XF Physical Copper Trust. However, a number of companies are protesting the move.
Opponents of the EFT, including copper fabricating companies such as Southwire Co., Encore Wire Corp., Luvata and Amrod, say its creation could increase market volatility. In a joint complaint, they write that “the launch of these new ETF products—and the supply disruption that it will create—will hurt not only us and the markets we serve, but [also] will have an extremely adverse effect on the U.S. economic recovery.”
Germany-based Aurubis, a major producer and recycler of copper, has strongly opposed the ETF, stating, “about 180,000 tons of copper will most likely have to be collected for it. This would probably lead to significant price effects in light of the LME (London Metal Exchange) copper inventories, which currently amount to 211,000 tons.”
The SEC’s Division of Risk, Strategy and Financial Innovation (RSFI) analyzed the impact a copper ETF would have on copper markets. RSFI released its findings Nov. 6, 2012, and sees no clear evidence of statistical causality between the historical flow of assets to physical metals ETFs and underlying prices and no strong statistical relationship between copper inventories and prices.
Looking at end markets for finished copper, he says that while the transportation sector continues to show decent growth, he questions how long this trend will continue, especially as other key copper-consuming sectors, including power and construction, continue to flag.
According to preliminary indications, the transportation market is starting to slow down. One source says the automakers Toyota, Honda and Mitsubishi all are reporting declining sales in Japan.
Despite this, he sees manufacturing in general strengthening, though the improvement is gradual.
As for power generation, a sector that has been a significant end market for copper, demand may be moderating after a fairly healthy run-up, a source says. Any slowing of this sector could ease demand for copper products as a raw material.
Despite these challenges, for a number of domestic copper producers, the market, while not great, has been strong enough to keep their operations running.
While the market for copper scrap during the next several quarters could be challenging, longer term there is optimism. Eventually, the global economy, including the housing market, will strengthen, which likely will contribute to the firming of the copper market.
Secondly, there appears to be an overall shortage of the metal on the market. According to the Lisbon, Portugal-based International Copper Study Group (ICSG), mine capacity utilization averaged 81 percent from 2008 to 2011 and mine production grew by an average of only 0.9 percent per year. The ICSG’s “2012 Statistical Yearbook” says the low numbers were a result of numerous factors, including lower head grades, labor unrest, technical problems and temporary shutdowns or production cuts.
A report from U.K.-based The World Bureau of Metal Statistics notes that copper markets recorded deficits through the first half of 2012. A deficit of 279,000 tons for the first six months of 2012 follows a 253,000-ton surplus during that same time in 2011.
Meanwhile, copper is becoming more expensive to mine, making copper scrap more attractive. A recent report by Chicago-based Resource Investor, www.resourceinvestor.com, which is affiliated with the Mining Indaba and Hard Assets groups of conferences and managed by the Summit Business Media’s Professional Services Group. Resource Investor notes that the average cost to extract one metric ton of copper in 2000 was $4,000 to $5,000. Currently, it costs roughly $10,000 to extract that same ton of copper. The report notes that the cost to mine copper from older mines will continue to grow, while the cost of constructing new mines, especially in regions of the world that are less politically stable, will add to a potential sharp increase in copper prices.
These factors could positively affect copper scrap demand, and price, in the long term. Despite some issues with grade substitution because of escalating costs, the longer-term outlook for copper scrap benefits from the continued need for the material by key sectors.
The author is senior editor of Recycling Today. He can be contacted at firstname.lastname@example.org.
Dating back to 1964, Canada-based Cascades Inc. has been focused on collecting materials for recycling and consuming them in the production of finished products.
In the ensuing decades, members of the Quebec-based Lemaire family (founders of Cascades) have forged an alliance with the Ontario-based Metauro brothers, whose former Metro Waste Paper company is now a division of Cascades known as Cascades Recovery. The Cascades Recovery name is now carried across 23 recycling plants (most in Canada and a few in the United States).
Cascades Inc., meanwhile, manufactures containerboard and other packaging grades, tissue, fine papers and products made from recycled plastic at facilities and offices in North America and Europe.
Recently, Recycling Today Media Group Editorial Director Brian Taylor had the opportunity to interview Cascades Inc. Vice President of Communications and Public Affairs Hubert Bolduc.
Among the topics addressed by Bolduc was the current operating environment for a company like Cascades—with its “Green by Nature” slogan and proud displays of the use of recycled content—in an era when sustainability has become an important way of doing business for major corporations.
Recycling Today (RT): How does Cascades communicate to its customers that it uses large volumes of recycled paper?
Hubert Bolduc (HB): About 10 years ago our salespeople would sometimes ask us to try not to mention that it was recycled material we are using. Today, it’s the contrary—they ask us to put more emphasis on it.
The easiest way we do so is on packaging, such as for tissue which is a consumer product. A lot of the plastics and foam we recycle is directed toward our Urban Design subsidiary, where we recycle plastics from the blue bins and we produce public park benches, picnic tables and Adirondack chairs. There is a lot of emphasis on recycling there, as those products are marketed.
As well, those who work with Cascades know. Within our marketing tools, such as the website, we try to put an emphasis on recycling.
In the first sentences of almost every press release we issue, we mention Cascades is a leader in manufacturing with recycled content. One of the certifications we use is FSC (Forest Stewardship Council). We use the FSC logo, which sends the message.
With [corrugated] boxes, what people really care about is price. But even in that sector, there is some attention given to the fact that there is recycled-content and a logo indicating that it is on every box we produce.
RT: To what extent do customers provide feedback that they are happy to support a company that uses scrap paper in its products?
HB: The first sign we get is an increase in sales. We have been receiving very consistent increases in tissue sales as of two or three years ago. Before some customers may have been skeptical about the softness of the tissue with recycled fibres, but now they are not.
There is interest in our blogs and in the social media sphere, where we get a lot of feedback on Facebook, Twitter or our Green By Nature blog.
We’ve also had an opportunity to see the interest first-hand at trade shows in Toronto and Vancouver, such as the Epic expo in Vancouver. There was a lot of interest there. Two years ago I went to a Toronto trade show where people were impressed with the recycled-content plastic products. They see where the recycled plastics they put into [recycling] bins go, and that an Adirondack chair could come from those discarded materials.
RT: Do customers indicate this makes Cascades a preferred supplier?
HB: Yes. It is a trend that is rising in popularity. NGOs (non-governmental organisations) are asking organisations like us to have a sustainable procurement strategy. They ask us and our suppliers to be good citizens. Universities and big organisations that want to buy from us ask us about what sources we use, etc. More and more we see that. We have to pose [that question] to our suppliers as well. The wheel is turning now and increasing its speed.
In 2010, Canada-based papermaker Cascades Inc. reviewed its mission to “purposely and proactively make a greater social impact” by developing its Sustainable Development Plan. With help from volunteering nongovernmental organizations, the company set goals against 18 key performance indicators (KPIs) to guide its business practices during a two-year period and to offer an example of how to place sustainability at the heart of a business enterprise.
Having recently passed the halfway mark with its plan, Cascades issued an interim report of its progress to date. The above chart provides a snapshot of how the company is doing on some of the 18 KPIs, which collectively fall under three categories: performance, leadership and transparency.
Another aspect, the carbon footprint aspect, is becoming more important to buyers as they seek to reduce CO2 emissions. Using recycled fibres or recycled plastic results in decreasing your carbon footprint. Organisations that are trying to reduce their footprints see that. People are striving to use less paper and when they do have to use it they will try to use recycled fibre to print their annual reports or their business correspondence.
RT: How has Cascades incorporated renewable energy in its operations?
HB: Twenty years ago we bought into Boralex, which is the number one windmill energy producer in France. It has from 18% to 20% of the market share there. There is a big windmill farm being built in Quebec right now by Boralex, and Cascades now owns 35% of the company. Boralex also is in the solar segment and we’re starting to bring some of that technology to Canada. Quebec has long used hydro-electricity and natural gas, which has a favorable impact on our business from the renewability or carbon footprint aspect. The important thing is that customers know we can produce paper with renewable energy.
On the fine papers side, our mill outside Montreal is using 90% to 95% biogas made from the methane emanating from a landfill. I would say it’s definitely one of the most ecological paper manufacturing plant in North America. People come from all over to see the plant and to find out how it works.
RT: Within the Cascades sustainability performance indicators menu, what are some examples from the “Sustainable Innovations” category?
HB: The most interesting one in terms of impact for the environment is the Norshield coated box. In the agricultural sector, a lot of waxed boxes are used [to package produce and meats]. They help protect the carton. But that type of material is not re-pulpable. The Norshield box is water-resistant but also is re-pulpable. We have sold about $40 million of that product, replacing about 25% of our waxed box market. We feel it’s one of the nicest innovations in the past few years. Cascades also makes ThermaFresh picnic coolers out of container board with this same Norshield product.
It involves a business-to-business sales strategy. You have to go see the farmers and convince them, and talk to all the grocery stores. We let them know that we can save on their landfill costs and recycle this type of box and save them money. It’s a long process, but it’s working.
RT: In addition to using recovered fibre, what are some other Sustainable Procurement steps taken by Cascades?
HB: We ask our suppliers to answer a questionnaire with questions regarding their use of recycled fibre or renewable energy. And we select our suppliers based in part on that—definitely in terms of energy; that's an issue.
We also consider sustainability in areas such as the management of our car fleets. We have about 500 company cars, and we do not allow our drivers to buy high gas-consumption models, and hybrids are preferable. It’s a small thing but it has a positive impact. It shows that we’re really serious about reducing our carbon footprint.
The bleaching at our paper mills is done without chlorine. It is more complicated, but beneficial.
An interesting thing we’ve done on transport side is that under the vans there are skirts that have been placed that are wind deflectors. We’ve put those on our 500 vans and they help reduce our fuel consumption by 6 percent. I should note that while today this may be more common, we did this 10 years ago or more.
These are small examples but they make a difference. We are green not by opportunism, but by philosophy. Recycling and sustainability yields common benefits, we believe.
Green By Design, our slogan, is a frame of mind still very much in progress. For people who may tend to forget that we’re the No. 1 recycler in Canada, we place that slogan on our cars, trucks and vans so they are reminded.
Hubert Bolduc is vice president of communications and public affairs at Cascades Inc., Quebec, Canada. More information on the company is available at www.cascades.com. This feature first ran in the Sept./Oct. issue of Recycling Today Global Edition.
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