Changes to China’s scrap import policies have reduced outlets for zorba, leading auto shredder operators in the U.S. to look for alternative options for the zorba they generate. For some, that has meant investing in equipment to further sort this material. Although traditional eddy current separators are effective at sorting nonferrous metals from nonmetallic materials, these machines fall short when trying to sort nonferrous metals from one another. This means recyclers have had to invest in sensor-based sorting technology or sink-float technology to further refine this material.

However, a team of researchers at the University of Utah, Salt Lake City, and EDX Magnetics LLC, a company associated with the research team at the University of Utah, have been working to remedy metals sorting challenges using high-frequency electromagnets and a new form of eddy current sorter employing electrodynamic sorting (EDX). The research was led by Raj Rajamani, who is a professor of metallurgical engineering at the University of Utah. Research associates for this project included James Nagel, Dave Cohrs and Jacob Salgado.

One issue the researchers aimed to solve was recovering aluminum from zorba. The widespread use of eddy current separators among auto shredders operators means they have a tendency to produce relatively similar mixtures, Nagel says. One of the more common products produced by auto shredders is zorba, which is loosely defined as any combination of nonferrous scrap metals that is predominantly aluminum. However, zorba can be a tough grade to sort further, Nagel says.

A grant from the Reducing EMbodied-Energy And Decreasing Emissions (REMADE) Institute, West Henrietta, New York, helped the team of researchers construct a high-throughput electrodynamic sorter that can process zorba at a rate of about 1 ton per hour.

With the electrodynamic sorter, as lightweight aluminum particles pass through a magnetic field, electrical eddy currents are induced and the particles are propelled over a mechanical divider. The aluminum is recovered from the rest of the zorba, producing a clean, high- purity aluminum that can be sold directly to a smelter, says Nagel, who also is a co-founder of EDX Magnetics.

“This machine works well at upgrading zorba,” he says. “We have a very good machine that works on fine zorba—zorba in the ¼-inch-to-1-inch size range. It’s very good at getting aluminum out of that material with high purity. You can also upgrade your zorba to twitch. It also upgrades the drops of your copper concentrates, so you can get more value out of that.”

Exciting technology

Rajamani first began researching magnets and eddy currents about a decade ago with hopes of developing an electrodynamic sorter. About five to six years ago, he submitted a proposal to develop an electrodynamic sorter to the Advanced Research Projects Agency-Energy (ARPA-E), which funded the basic research.

Nagel says Rajamani and his team partnered with the REMADE Institute to scale the technology and make it more practical for use in scrap metal recycling.

Photo: EDX Magnetics LLC

Nagel adds that while the concept of EDX has been around for decades, EDX Magnetics’ machine is the first embodiment that “really works” to sort nonferrous metals.

EDX Magnetics’ electrodynamic sorter operates similarly to a traditional eddy current separator, Nagel says. The main difference is that eddy current separators are mechanical and feature a rotating cylinder, whereas the electrodynamic sorting machine features a nonmoving electrically excited field.

“The traditional eddy current is physically moving a permanent magnet,” he says. “You have to mechanically move the magnet near the metallic object in order to excite the eddy current. We have an electromagnet, so it’s magnetic material that you excite with an electrical current, and that creates a magnetic field. There’s nothing moving. It’s a solid block with an electrical current exciting it.”

Nagel says the key principle with EDX technology is the high frequency of excitation that allows users to sort nonferrous metals from other nonferrous metals.

EDX Magnetics’ electrodynamic sorting system begins with a vibratory feeder that distributes scrap material onto a conveyor belt. Embedded within the conveyor assembly is an electromagnet core that is excited by an alternating electrical current. The tips of the electromagnet are placed in direct contact with the underside of the conveyor belt so that scrap particles can pass directly through the magnetic field overhead.

Depending on factors such as electrical conductivity, mass density and physical geometry, some of the particles will repel up and away from the magnet. These particles are referred to as “throws.” Any particles that pass through the field without significant deflection are referred to as “drops.” A mechanical splitter separates the throws from the drops, which collect in corresponding bins.

Because of the excessive heat that builds up in the electromagnets, an axial flow fan is used to circulate air through the cores to maintain a stable temperature. Nagel says the EDX technology also serves as an alternative to density separation technologies.

“[Density separation technology] exists and people are using it, but it’s expensive,” he says. “There is a huge processing cost with it—you may need to clean and dry materials. There are regulatory hurdles [to that model] as well. All these factors come together to determine whether that technology is viable or not.”

Prepping to go to market

Lab testing on the technology was completed between February 2018 and November 2019, and Nagel says EDX Magnetics is almost in a position to sell the electrodynamic sorter commercially. But first, he says, the researchers need to test the machine in a scrap yard setting for a few months. Once the researchers know the machine can operate for three-to-four months in a scrap yard with no major failures, Nagel says EDX Magnetics will be ready to start taking orders.

He adds that the machine’s cost will be on par with that of a traditional eddy current separator. However, Nagel explains, this technology isn’t meant to replace eddy current separators; it supplements them by providing a better sort. “Most eddy currents, they’re very good at getting metal out of nonmetal, but they aren’t very good at sorting metal after the fact,” he says. “This machine would come after a traditional eddy current.”

Based on the lab testing, Nagel adds that the electrodynamic sorter can comfortably sort zorba at a rate of about 1 ton per hour. It can be pushed to about 1.5 tons per hour, but he says “that is the upward limit of pushing material through.”

This technology offers other advantages in nonferrous sorting, Nagel adds. One benefit is that the machine can sort particles that are as small as 1 millimeter. The sorter requires only 4-to-5 kilowatts of power to operate. Also, the machine operates efficiently in warm and cold climates alike, but it achieves even better results in cold temperatures, he says.

Nagel adds that the electrodynamic sorter can be targeted to process other grades of nonferrous metals beyond zorba, as well. “This technology can be applied to other materials; just focus it on the greatest need.”

The author is managing editor of Recycling Today and can be reached at msmalley@gie.net.

Operating costs for flat-rolled minimill producers dropped in 2019 as weaker steel markets have pulled down metallics prices. This has meant that operating costs for minimills were in line with integrated producers in the United States throughout much of 2019. However, that cost level is not expected to be maintained.

US minimills are typically higher cost

On an operating cost basis, U.S. integrated mills typically are lower cost than their minimill peers. Scrap prices are tied to the marginal cost of hot metal production—meaning that the input for scrap-based steelmaking is typically higher than the average ironmaking bulks mix (iron ore, coal and coke). Supply-and-demand dynamics in the steel and scrap markets influence scrap prices, and high steelmaking margins will increase the spread between scrap prices and ironmaking costs and vice versa. In the U.S., domestic scrap prices are influenced by export scrap prices, with U.S. export scrap prices being linked to European and Turkish scrap prices. Scrap prices in Europe and Turkey are in turn driven by the marginal cost of hot metal production in these regions, which is typically higher than in the U.S.

Minimill costs are More volatile

Lower cost U.S. integrated producers, such as Pittsburgh-based U.S. Steel Corp. and Chicago-based ArcelorMittal USA have access to captive iron ore pellets that are charged to the mills on a cost-plus-logistics basis. These same integrated producers also have varying access to captive coal and coke that are charged to the mills on a cost-plus-logistics basis.

Higher cost integrated producers typically buy all or most of their iron ore and coal from merchant producers, such as Cleveland-Cliffs Inc. and SunCoke Energy. In this case, the raw material purchases are typically conducted on a multiyear contract basis, with quarterly price adjustments that take into account changes to seaborne raw material prices, shape premia, steel prices and Consumer Price Index movements.

These pricing arrangements for integrated producers have an important impact on costs. Integrated producers’ costs tend to move slowly, changing with contract adjustments and/or mining cost changes. As such, the costs for integrated steelmakers are less volatile than those for minimills.

CRU forecasts that steel prices and margins will increase from the fourth quarter of 2019, signaling that scrap, and metallics prices more generally, will rise in price.

Metallics prices moved downward for the balance of 2019, and costs for minimill producers have declined quickly as a result. The costs for mini- mill producers are much more responsive to changes in market prices because of the shorter time frames on which minimills purchase their raw material inputs—typically on a monthly basis.

What happened in 2019?

For much of 2019, steel markets have weakened, and scrap prices have dropped closer to marginal hot metal production costs. In the U.S. this has meant that flat-rolled production costs for minimill producers have dropped, with minimills on average producing steel at a lower cost than the higher cost integrated operations that do not have access to captive iron ore pellets. In addition, raw material prices for iron ore and coal were high for most of 2019 because of supply side issues, though these issues began to unwind in September. The result of these swings in raw material prices has led to partitioning on CRU’s hot-rolled coil cost curve.

Will minimills stay lower cost?

CRU does not expect that the current cost level for minimills will be maintained. Low scrap prices reduce U.S. domestic scrap supply, and the growing minimill sector has an increasing appetite for scrap. In addition, CRU forecasts that steel prices and margins will increase from the fourth quarter of 2019, and these factors signal that scrap, and metallics prices more generally, will rise in price. In turn, this will increase minimill costs back above average integrated mill costs in 2020 and they will stay higher than integrated mill costs out to 2023.

This relative improvement in cost position will come as welcome relief for the integrated sector in the U.S., which struggles to realize the earnings before interest, taxes, depreciation and amortization (EBITDA) margins and profitability of the minimill sector. From 2020 onward, the integrated sector will again see cost inflation.

© Wisut / stock.adobe.com

What does CRU’s Steel Cost Model tell us about the drivers of the cost changes for the integrated sector?

CRU’s Steel Cost Model is designed to provide granularity and transparency that allows the user to understand exactly what is driving changes in costs and competitiveness in the U.S. and the rest of the world. (CRU’s Steel Cost Service provides a comprehensive examination of steelmaking costs for semifinished, flat and long products across the global industry for the years 2006 to 2025. Access to the Cost Analysis Tool allows users to generate individual asset reports with all key operation data via the web-based software. Further information and a demo are available by contacting CRU.)

Overall, costs will rise for the integrated sector from 2020 onward for a variety of reasons:

• Iron ore supplied on a contract basis will feel upward price pressure because of rising hot-rolled coil prices and U.S. inflation.
• Iron ore supplied on a cost-plus-logistics basis will see delivered prices rise because of mining cost inflation.
• Rising metallics prices also will affect U.S. integrated steel producers but will do so to a lesser extent than it will affect minimills.
• Higher wage rates, negotiated by workers’ unions in 2018 when steel prices were high, will increase labor costs.

A forecasted decline in coal prices globally somewhat offsets these cost rises; however, overall, costs are expected to rise.

Given our expectations for the raw materials and metallics markets, CRU does not believe the current low cost base of minimill producers will be maintained: Minimill costs will rise as the steel market improves and additional minimill capacity begins to come online. The integrated sector will see some relief as their costs drop below those of the minimills in 2020 but, from 2020 onward, costs for the integrated sector also will begin rising.

Ryan Smith is a senior analyst based in Sydney with London-based CRU Group. He is responsible for CRU’s Steel Cost Service, which provides comprehensive coverage of the global steel industry and details CRU’s independent view of the cost structures for semifinished, flat and long products. More information is available at www.crugroup.com.

Chicago-based General Iron Industries Inc. has invested $2 million to install a regenerative thermal oxidizer (RTO) on its mega shredder. The RTO is designed to reduce emissions of volatile organic compounds (VOCs) from the company’s auto shredder, which has been operating at the site since 2002.

Catalytic Products International (CPI) of Lake Zurich, Illinois, supplied the RTO, which was installed last summer. Since the installation was completed in July, General Iron and the Illinois Environmental Protection Agency (EPA) have agreed on an administrative consent order resolving the alleged violations the EPA issued in 2018.

Adam Labkon, vice president of General Iron, describes the installation of the RTO as a “proactive step.”

A proactive response

In late 2017, the EPA requested air emissions testing for General Iron’s auto shredder. The company says it conducted emissions testing for total VOCs, particulate matter (PM) and metals May 24 and May 25, 2018, and for metals again June 13 and June 14, 2018.

According to an Aug. 23, 2018, letter from General Iron attorney Ann M. Zwick of the law firm Freeborn & Peters LLP, Chicago, to Erik Olson, U.S. EPA associate regional counsel, “We believe that the results of the independent emissions testing demonstrate that no emissions of metals or filterable PM violated any permitted levels of applicable requirements. General Iron is one of only a few metal shredding facilities, and the only one in the Chicago area, that has installed a high-efficiency air filter to control PM and metals emissions, and the test results support the filter’s effectiveness. The PM and metals testing required by EPA, including for 17 specific metals, as well as the additional impact assessment that General Iron voluntarily performed, demonstrate that General Iron’s PM and metals emissions were far below relevant limits.”

The letter also states that “General Iron acknowledges that the emissions testing showed that its potential to emit VOCs exceeds the Title V major source threshold.” However, it adds, “It is important to note that (1) actual VOC emissions from the shredder over the past five years were less than 89 tons per year, which is below the current major source threshold of 100 tons per year and (2) General Iron has never operated anywhere close to its permitted levels. With the installation of the RTO, General Iron’s potential VOC emissions will be significantly below the Title V major source threshold and will qualify General Iron for a FESOP (federally enforceable state operating permit).”

In absolute terms, General Iron says its VOC emissions are a fraction of the overall VOC emissions from stationary sources in Cook County, Illinois. The company says its actual VOC emissions from the shredder, averaged annually over five years, were about 0.17 percent of the VOC emissions from all stationary sources across Cook County in 2014, based on Illinois EPA data submitted to the U.S. EPA’s National Emissions Inventory.

Photo: DeAnne Toto

However, Labkon says the testing showed the company’s “potential to emit” could exceed permitted requirements. He adds that General Iron does not run the shredder 24 hours per day, seven days per week, but for one shift daily, which can range from 11-to-12 hours with on-and-off operation, from five to seven days per week.

A recent agreement between the company and the city to relocate General Iron’s existing location on Chicago’s north side to its new owner Reserve Management Group’s (RMG’s) existing location on the south side also imposes oversight of its activities, including limiting the shredder to operating between 7 a.m. and 9 p.m.

The consent order that General Iron reached with the EPA memorializes the RTO’s installation and operation and sets a timetable for demonstrating its efficiency and obtaining the proper permit, which fully resolves the notice that the EPA issued in July 2018, the company says.

Operating requirements

General Iron runs an 8,300-horsepower auto shredder from Riverside Engineering, San Antonio. Labkon says the shredder processes a mixture of auto hulks and structural steel from demolition sites and light iron and miscellaneous steel, with the latter combination making up the bulk of the company’s feedstock.

Under the EPA consent order, General Iron must ensure the RTO destroys 98 percent of the shredder’s VOC emissions. The company tested the effectiveness of the unit in late November 2019.

General Iron says it conducted this performance testing under the supervision of the U.S. EPA. The preliminary test results, which the company says will become public when finalized, demonstrate that General Iron’s RTO meets a minimum destruction efficiency of at least 98 percent.

How the technology works

Jim Kallas, General Iron’s environmental manager, says General Iron selected CPI to supply the RTO because, as a local company, General Iron thought CPI would provide good service. “We looked at three companies before choosing them.”

Stephen H. Klostermeyer, vice president of sales and marketing for CPI, says that while the company has received only a few specific inquiries from shredder operators, air emissions controls are a growing area of concern for the industry. “They are on the radar of most everyone that I have spoken to in the industry.”

When it comes to controlling auto shredder emissions, he says, “It starts with emissions containment and collection. In some cases, the shredder operator may only need to add particulate control. However, if the level of VOC emissions exceeds the regulations, they may have to implement VOC control, as well.”

Klostermeyer adds that companies like Buffalo, New York-based Wendt Corp., a supplier of auto shredders and downstream sorting systems, are focused on providing solutions for the containment and collection of emissions as well as large and small particulate control, while CPI is focused on VOC, acid gas and compliant air discharge. While he says it can be more common for shredder operators to control particulate emissions from their machines using a cyclone, controlling VOCs using an RTO is a new focus.

Photo: General Iron Industries Inc.

For an RTO to work effectively, however, shredder operators also should install particulate control so that the RTO does not get plugged up, Scott Harmsen, chief operating officer of CPI, says.

General Iron installed a high-efficiency air filter, consisting of a capture hood, cyclone and roll-media filter system, in 2013 to control PM and metals emissions.

The RTO destroys VOCs by heating the shredder exhaust gases at extremely high temperatures. The hot RTO exhaust gases then pass through a quench/packed tower scrubber, evaporating a portion of the scrubber water and generating steam.

RTOs offer cost savings over other thermal oxidizers because of the regenerative nature of the heat exchanger design, CPI says. The unit heats the inlet gases as they enter the ceramic-media-filled regenerator column to a temperature in excess of 1,425 F upon exit of the ceramic media. The preheated gases then enter the combustion chamber and are heated to the temperature at which oxidation of the VOCs occurs, which is generally 1,500 F. The air then passes through the second heat exchanger, which also has ceramic filter media, and is cooled before being directed to the exhaust stack and released into the atmosphere. The exchange of air from the second regenerator column with the first is why RTOs have a thermal efficiency in excess of 95 percent, CPI adds.

The VOCs are oxidized, or combined chemically with oxygen, in the RTO and turned into CO2 and water that are emitted to the atmosphere, Harmsen says.

Klostermeyer says he recommends that shredder operators seek input from air pollution control consultants who understand local regulations before shopping for emissions control products.

Foundations for the future

General Iron RMG, which has headquarters in Stow, Ohio, and Chicago, agreed in July 2019 to relocate the General Iron facility to Chicago’s south side.

This facility will feature a European-style enclosed shredder on a 175-acre site that is approximately seven times larger than General Iron’s current location. The partners say they will invest $65 million to $70 million in the new facility. In addition, the RTO will be transferred from the company’s existing site to the new site, Labkon says, and put into operation there.

General Iron reached an agreement with the administration of Chicago Mayor Lori Lightfoot, Alderman Brian Hopkins and Alderman Susan Sadlowski Garza that lays out additional operating requirements for the company until it moves.

“We are grateful for the mayor and her team’s leadership in forging an appropriate compromise to support the continuity of the critical service that General Iron has performed for more than a century,” Labkon says. “We are excited that this new venture, led by RMG, will continue providing more than 100 jobs and critical metal recycling services.”

“We appreciate the city’s assistance in helping us to move forward with building a new, state-of-the-art facility to complement RMG’s existing recycling operations on the city’s south side,” says Steve Joseph, president of RMG. “We expect to create nearly 800 on- and off-site construction jobs, and we are committed to protecting the environment and public health and safety as the business transitions from the north side to our longtime south-side home.”

The author is editor of Recycling Today and can be contacted at dtoto@gie.net.

As the U.S. recycling industry responds to changing trade regulations in China as well as in some Southeast Asian countries, scrap recyclers are looking to invest in additional processing and sorting technology to produce furnace-ready scrap grades that can be consumed domestically as well as abroad. Sometimes, finding financing for these investments can be challenging.

B. Riley Financial Inc.’s Great American Group, headquartered in Los Angeles, works with lenders, private equity, corporate executives, corporate advisors and attorneys. B. Riley Financial and its subsidiaries provide collaborative financial services and solutions tailored to the capital raising and financial advisory needs of public and private companies and high net worth individuals.

Michael Petruski serves as managing director of Great American Group. He specializes in metals and manufacturing and has expertise on complex, syndicated asset-based lender (ABL) credit facilities and the type and scope of valuations necessary to expedite such transactions from a lender’s perspective. Prior to Great American Group, he spent many years at American Can Co. in manufacturing, procurement and international machinery sales. Petruski also has held positions at several financial institutions, including Wachovia Capital Finance and Citigroup.

He is a member of the Secured Finance Network (formerly the Commercial Finance Association) and the Turnaround Management Association.

He describes Great American Group as a generalist appraisal company. “We provide asset values primarily for inventory, machinery and equipment for industrial companies, manufacturers, wholesalers [and] retailers.”

Great American Group’s services include appraisals of inventory and machinery at scrap yards.

Petruski says he has an “appreciation” for what lenders are looking for. “Most of the work that we do is directly for asset-based lending.”

The company works with lenders that include Bank of America, Wells Fargo, PNC and SunTrust to perform appraisals of assets that are going to be used as collateral for loans that are typically set up as revolving credit facilities. “The machines and equipment when we do an appraisal are typically set up as an amortizing term loan—no different than your mortgage,” Petruski says, adding that the terms generally range from five-to-seven years depending upon the asset type and credit policy of the lender.

“If your past performance indicates that you have inconsistent earnings, you may want to have a shorter term loan.” – Michael Petruski, managing director, Great American Group

In the following interview, Petruski shares some of the insights he’s gained working with scrap yards and lenders over the years.

Recycling Today (RT): Have you seen inquiries for financing from scrap processors increase since access to the Chinese market has been restricted? If so, have you noticed any trends in the types of investments they have been inquiring about?

Michael Petruski (MP): I would say that that would have to be a no. Over the last few years, with the volatility in scrap prices and steel prices, we’ve actually seen most ferrous and nonferrous recyclers kind of sit on the sidelines. If anything, we’ve seen more—this is probably more like three years ago, four years ago—many of the smaller yards go into bankruptcy and more [used] equipment was put on the market and available. There was kind of a resetting of who the players were. The bigger players tended to be the survivors and those smaller one-yard, two-yard processors either went out of business, filed for bankruptcy and/or liquidated, so the bigger guys had the opportunity to be able to buy equipment if they needed it to upgrade existing processing equipment. They had the capital available and the cash available to wait through downturn.

What we did see, I would say, is those people were looking to invest more in eddy current systems where they could sort scrap at a higher efficiency. And some invested in large shredders. These large shredders would be anything over 5,000 horsepower to 7,000 horsepower. These units could easily be in the $5-to-$7 million range for an investment. But typically those types of companies are not looking for financing. They already have some sort of a large commercial loan with a large bank, so they’re not playing in the asset-based side.

RT: What are the various types of financing available to scrap metal recyclers looking to add capital equipment to their operations?

MP: I would say there are two. One is the asset-based loan [which is secured with collateral]. The other would be equipment finance leasing.

Most of the major center banks and nonbank lenders have a group called equipment finance and leasing, which is off balance sheet. That is the ability to lease equipment from a lender, be it a bank or nonbank. It tends to be a little bit more expensive, but it’s a way to keep the asset and the expenses off the balance sheet. That’s something that a particular lender will focus typically on brand new equipment and not used equipment.

A manufacturer of a baler or a shredder has a relationship with Regions Bank or Wells Fargo or Bank of America, and [the buyer] can finance it over five-to-seven years or seven-to-10 years—most are in that five-to-seven year time frame. The borrower is making payments up until there’s a balloon payment due at the end, and the lessee makes a decision on whether or not they want to buy the equipment outright or the lessor or the lender then takes that equipment and tries to remarket it to another buyer.

RT: What information can help recyclers best make their case to a lender?

MP: If we’re talking just about equipment itself, it is the need for it. How is it going to improve the company’s profitability? Why do you need it? Why do you think this will make you a better company?

RT: What questions should recyclers ask of potential lenders so no surprises arise over time?

MP: How is the interest rate tied to the loan?

Most term loans for asset-based lending are based on Libor (the rate that international banks charge for short-term loans to each other), and it’s a Libor rate plus. With a term loan, the interest rate is going to be higher than on a revolver that’s being secured by inventory and accounts receivable.

A term loan could be Libor plus—depending upon the credit quality of the borrower—300 basis points up to 600 basis points.

The second is: Are there any covenants in the loan agreement that would trigger a higher interest rate, like nonperformance?

If there’s a change in the debt-to-equity ratio of the company or in the financial performance of the company, that could trigger a covenant.

If your past performance indicates that you have inconsistent earnings, you may want to have a shorter term loan. That usually is a negotiation, and it’s based on the lender looking back on historical financial performance.

Michael Petruski is managing director of Great American Group and is based in West Palm Beach, Florida. He can be contacted by email at mpetruski@greatamerican.com.