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The Art of Reinvention

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Dave Kassel and the associates of The New Reclamation Group have learned to take on a wide variety of South Africa’s recyclable commodities.

Brian Taylor July 18, 2012

For more than 40 years, members of the Kassel family have been involved in South Africa’s scrap metal recycling industry.

David Kassel currently is chairman of The New Reclamation Group (Pty) Ltd., Johannesburg, a company that continues to be involved in the collection and processing of scrap metal but has gone well beyond that.

The company, which also goes by the shorter name Reclam, processes scrap metal in South Africa and seven neighboring nations (Angola, Botswana, Mozambique, Namibia, Swaziland, Zambia and Zimbabwe).

Reclam’s recent history includes a name change and an ownership restructuring. More recently, that history has consisted of venturing into new business segments, including the manufacturing of scrap processing equipment, licensed tyre recycling technology and a licensed oil-to-fuel recycling technology.


Pushing its Frontiers
As its name implies, The New Reclamation Group (Reclam) is a fairly young company, having been structured in 2006.

The creation of Reclam in that year, however, was far from a greenfield start-up. Instead, it involved the management buyout of scrap recycling assets that David Kassel and key associates had been building up since 1970.

David’s role in South Africa’s recycling industry—before, during and after the creation of Reclam—has been as an entrepreneur pushing scrap companies to grow geographically and in the range of services provided.

From 1970 to 1998, a company co-founded by David operated under the name Lenkas Group. In late 1998 a company called The Reclamation Group was established to consolidate the South African recycling industry. Reclam’s mission was to become a “leader that would have the size and scope to create economies of scale and operating efficiencies in the South African recycled metal processing industry,” according to David.

“Between 1998 and 2000, Reclam acquired a number of businesses, including Lenkas Group, involved in the production of recycled ferrous and nonferrous metal products,” he continues. “It consolidated 14 such businesses situated in South Africa and in Mozambique.” Subsequent to the consolidation, the first iteration of Reclam was moving beyond metals. “By 2002, Reclam [was] expanding its operations by diversifying into other products that could benefit from similar economies of scale and operating efficiencies,” says David.

The group’s diversification steps included:

  • 50% equity interest in Heever Rubber, a rubber processing and devulcanising company (and its associated intellectual property);
  • involvement in glass, paper, cardboard and plastic recycling through the acquisition of Enviroglass in December 2000 and Capital Waste and Plastics in January 2001; and
  • diversification into integrated waste management services.


Geographically, Reclam expanded its footprint not only in South Africa but also established operations in Botswana, Kenya, Malawi, Mozambique, Swaziland, Zambia and Zimbabwe.

In 2003, Reclam concluded its first Black Economic Empowerment (“BEE”) transaction in which 25% plus one share of the equity was sold to Phamangu Investment Holdings in a transaction partly funded by the Industrial Development Corp. of South Africa. (Another such transaction was undertaken in 2008, when Reclam’s empowerment partners became part of a consortium that holds a 25% stake in Scaw Metals, according to David.)

Horizontal expansion into semi-finished metals production was another Reclam strategy. This included the production of aluminium ingots in partnership with Murray & Roberts Limited and the production of copper sulphate, which is used in the platinum refining process.

The structural change that led to the New Reclamation Group (aka Reclam Group) name was a management buyout that took place in February 2006.


Proactive Response
For David Kassel, his son Harry, CEO Jeremy Joffe and the Reclam Group’s senior management, there is no shortage of company matters to attend to in Southern Africa. Even so, David, Harry, Jeremy and Rory Noonan spent part of their April in the U.S., exhibiting at the Institute of Scrap Recycling Industries Inc. (ISRI) Annual Convention in Las Vegas.

One of the objectives during the week, according to David, was to let the North American and international recycling industries know more about the two nonmetallic recycling technologies Reclam had developed.

Reclam’s HRT (Heever Rubber and Tyre) technology is billed as “the world’s first rubber devulcanisation and revulcanisation process.”

David acknowledges that making the economics of the devulcanisation/ revulcanisation process work has long been regarded as a non-starter by the rubber industry in general, but he says the HRT process has distinctive features that make it work. He says the system does “not break down the carbon bonds” and is more of a “semi-devulcanisation process” that produces a revulcanised product. This process takes place without creating any emissions and the resulting liquid rubber product is turned into solid tyres or can be used in the making of other rubber products. David says Reclam forklift trucks are now operating with HRT-made solid tyres.

Another opportunity involves the licensing of Reclam’s oil recycling process. “Reclam has developed a unique and patented process for the economic recycling of all old oil products,” says Harry Kassel. Among the advantages of the Reclam Recycled Oil to Fuel process, says Harry, is that it can be used for relatively small volumes of collected oil. A recycling company that can collect about 40 tonnes of recycled oil can use the Reclam system to convert it into a heating oil product or a marine bunker fuel.

A selling point of the system, says Harry, is that a wide variety of used oils can be stored and processed together, including engine oils, hydraulic fluids, transmission fluids, brake fluids and other oils. Such oils can be collected from auto dealers, heavy equipment dealerships, auto salvage operators, landfills and a wide variety of other sources, says Harry.

Increased attention to these alternative materials and technologies has been undertaken in part as a response to a global scrap metals market that experienced dramatic declines in volume in 2008 and 2009, says David.

Reputation Builder

As it has developed and built its market share in southern Africa, The New Reclamation Group (Reclam) and its chairman David Kassel also has built a solid reputation.

Among the awards and recognition the company and its chairman have earned are:

  • in 2005, David Kassel was awarded the ABSA Bank Jewish Business Achiever Award;
  • in 2007 and 2008, Reclam was nominated by Topco Media, a business-to-business media firm, as one of South Africa’s Top 500 companies and was number one in its sector
  • in 2008, Reclam was awarded a Standard Bank Trophy for financial performance and contribution to the environment
  • in 2008, Reclam was nominated for its contribution to Broad Based Black Economic Empowerment and Transformation; and
  • in 2008, Reclam was awarded the ANC (African National Congress) certificate for commitment to the economic future of South Africa.

“As is the case with the rest of the world, our local operations are affected by the worldwide recession,” he comments. Calling the financial crisis “the most pertinent issue” Reclam has faced in the past several years, David says that among Reclam’s responses was diversifying “into other recyclable products such as rubber and oil.”

Reclam also enjoys revenue streams from the sale of scrap processing equipment it manufactures (under the brand name Hamma Equipment) and from the operation of a waste hauling and management division.

On the equipment side, “We offer complete shredding plant solutions from design through to engineering and construction, as well as training, maintenance, servicing and upgrades,” says Harry. “Hamma Equipment manufactures steel shredders, wear parts, pipe cutters, burn boxes, grabs and various other components used in the steel recycling trade.”

On the waste management side, Reclam offers what David calls “a holistic waste management solution to a broad range of industries in South Africa, including management and removal services, which help customers dispose of nontoxic waste they produce.” As part of that service, Reclam personnel also advise customers on recycling scrap materials, says David.

Reclam’s demolition service can act as a contractor or sub-contractor “to remove obsolete or surplus buildings, plant, steel and concrete structures,” says David. The activity serves as a source for ferrous and nonferrous scrap materials, as does another specialty service offered by Reclam in which it recovers metal from steel mill and foundry dump sites.


Global Outlook
As it has explored new frontiers, Reclam also has continued to pay close attention to its core secondary commodity markets. “We source and process about 2.5 million tonnes of recyclables per annum,” notes David.

Of Reclam’s network of more than 80 collection and processing facilities, David says, “Most of the branches collect and process mainly recyclable metals, with paper, cardboard, plastics, etc. also collected and processed at other branches, in addition to metal.”

“Today, Reclam’s business can be considered as ‘above-the-ground’ mining,” says David.

“Reclam beneficiates basic commodities that are sold to the same customer base as that of the mines. The only difference is that its raw material is a secondary or recycled material relative to ‘virgin’ material, which is beneficiated from an ore.”

The company faces a challenge specific to its region in the form of South Africa’s National Environmental Management Waste Act, in which scrap metal is regarded as a waste instead of a raw material, says David.

Navigating regional policies and global conditions will likely keep Reclam’s executive team busy. In all circumstances, David says, “Business is about people and the ability of the executives to motivate staff to achieve the best end result. Thereafter, integrity and ethics in conducting business is paramount.”

The company already conducts trade with a wide variety of nations. “We sell to the local consuming industry but also export to international markets in Asia such as India, South Korea, Pakistan, Malaysia, Taiwan, China and Japan,” says David. “We also export to the EU—to countries such as Germany, Belgium, Spain and the United Kingdom—and we export to countries such as Israel, Kenya, Malawi and Nigeria.”

With the rollout of its HRT scrap tyre processing technology and the recycled oil-to-fuel system, strengthening its presence in the wider world will be a key focus in the next several years.

“Our immediate focus is on the international expansion of our oil and rubber recycling business as well as our other key sectors,” says David. “Establishing a wider global presence can help us create a solid foundation for future generations,” he states.


 

The author is editorial director of Recycling Today Global Edition and can be reached at btaylor@gie.net.

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