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An Ambitious Goal

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Aluminium producer Novelis Inc. is pursuing a lofty 80 percent recycled-content target.

Brian Taylor September 12, 2012

Aluminium producer Novelis Inc., Atlanta, has long used aluminium scrap as an important feedstock in its operations, particularly at the can-sheet plants that were once part of the former Alcan Aluminum Corp.

Novelis Inc., now a part of India-based Hindalco Industries Limited, continues to produce can sheet from scrap in large amounts. The company also produces primary aluminium and alloys for a wide range of industries, including the automotive and consumer electronics markets.

In 2011, Novelis Inc.’s leadership announced an ambitious goal to use scrap as 80% of the company’s overall feedstock at its aluminium production facilities worldwide by 2020.

“Novelis is building a supply chain that will reduce its dependence on primary metal mining, smelting and production,” says Derek Prichett, vice president of global recycling at Novelis. “That’s the impetus behind the company’s focus on sustainability as an innovative business model. By relying less on primary metals producers, Novelis not only secures a more consistent and manageable source in input material, but also positions itself as a critical partner to customers looking to increase their own use of recycled material in everything from beverage cans to automobiles to flat screen TVs and other consumer electronics products.”

Recycling Today Media Group Editorial Director Brian Taylor recently had the opportunity to interview Prichett about the Novelis emphasis on scrap inputs and sustainability.


Recycling Today (RT): How did you become the vice president of global recycling at Novelis?

Serious Numbers

The announcement by Novelis Inc., Atlanta, that it is planning a shift to using 80% aluminium scrap as its feedstock involves some seriously large numbers.

Novelis is a $10 billion global leader in the metals production industry that appears to be banking on sustainability as the key driver of its aggressive business model. The company says it also has invested more than $1 billion in capital expansion projects.

The company’s approach to the goal is touted in several places on its website, including the Novelis 2011 Sustainability Report, found http://www.novelis.com/en-us/
Documents/48759_Novelis_SR_AW_
LINKED%20revised_final.pdf
.

Novelis says the new plan involves taking a completely different tack. The company has made progress by increasing its recycled content mark to 39% in the subsequent 12 months. As Novelis produces 3 million tons of rolled aluminium each year, “This progress is already generating tremendous reductions in energy usage and greenhouse gas emissions,” according to the company.

Those who want to know more about the Novelis strategy can attend a presentation by Silverio J. Colalancia, director of recycling - Novelis North America, Sunday, Oct. 14 at the Paper Recycling Conference session “A Thirst for Aluminum,” www.PaperRecyclingConference.
com
.)

Derek Prichett (DP): We created this recycling role one year ago, based in part on meeting the objective of using 80% scrap feedstock by 2020. I was named to form a group and lead that process and deliver that objective. In the one year since, I’ve been very pleased that we’ve put a visible dent in meeting the objective. We’re growing awareness of our theme internally and have set up organizations on the recycling side in each global operating region. We’re working on a broad-based plan that touches all areas of our business—everything from operations to supply chains, technology and the ability to sort and purify different scrap types and inputs.


RT: So you’re happy with the results you’ve seen in year one?

DP: When we started this, our rate was 33% based on recycling inputs as of fiscal year 2011. In fiscal year 2012 we managed to increase that to 39%. We’re pleased with the initial progress. We feel very comfortable now that we have a good line of sight and a good, executable plan established to get us to at least 50% by 2015, and we’re still on our path to 80% by 2020.

We have the fiscal year 2012 results published in our SEC 10K report.


RT: What are some of the potential barriers to 80% recycled content, and how can they be overcome?

DP: We’ve been working hard on increasing our operational capacity to consume recycled materials. In some places we just don’t have the equipment footprint to bring in significantly more recycled material, but we’ve dedicated a significant amount of our capital spend to increase that.

For instance, there is a new recycling facility coming online in South Korea that is almost complete now—it will start up in September 2012. We’re making sheet ingot at that plant and bringing in beverage can scrap.

Another major facility is in the design phase and almost ready to start construction in eastern Germany. And a third one announced within the past year is in Brazil. We already have a recycling facility in Brazil, but we’re approximately doubling capacity there. Both the German and the Brazilian capacity should be online in 2014.

The Korean facility is similar to our sheet ingot plant in Berea, Kentucky, in the United States. Like Berea, the new plant in Korea is using primarily UBCs (used beverage containers) and process scrap from the can industry. The one in Europe has the same capabilities plus expanded capabilities.

We get most of our scrap today from the beverage can market—something like 65%. That market only represents a small percentage of the available global aluminium scrap market (maybe 15%). So the challenge we have is to broaden our input base and buy more scrap from other markets, such as electrical wire and cable, extrusion scrap and automotive-type scrap.

We need some new technology and processing capability to be able to bring some of that scrap in. The European facility can do that. It is designed to be more flexible and multi-purpose and to allow us to bring in all types of material.


RT: Will UBCs remain an important part of the strategy?

DP: In the North American market, UBCs are in high demand and there is active competition. In other parts of the world we can increase our market share. So our goal is to continue to grow our UBC inputs in Asia, South America and Europe. The beverage can market also is growing quickly in South America and Asia. The situation in North America is a little different. The beverage can market is more mature and thus the generation of UBCs is not nearly as high.


RT: Is it your sense that aluminium producers, beverage makers and retailers in the United States are maintaining their historical reluctance to adopt deposit/return methods?

DP: We believe that a deposit system can be a very effective way to increase the recycling rate. Jurisdictions where these systems exist have a much higher recycling rate on average. Recycling rates in the deposit states are in the 70-to-80% range compared to a 30-to-40% range in non-deposit states. Deposit does work. The concern some of the stakeholders have about deposit is that it’s an expensive system. We think, though, that it can be one of a number of different ways to approach a problem.

Novelis is a member of the Curbside Value Partnership (CVP) group. We’d like to see more stakeholders from different industries become stakeholders in CVP.

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