N.Y. Power Authority Approves Power Deal with Metalico Subsidiary

The New York Power Authority (NYPA) has approved the allocation of low-cost hydropower from its Niagara Power Project to assist Buffalo Shredding and Recovery LLC, Hamburg, N.Y., in converting a vacant steel galvanizing mill in Erie County, N.Y. that was owned by ArcelorMittal, into a scrap metal recycling facility that will include an auto shredder.

Buffalo Shredding and Recovery, a subsidiary of Metalico Inc., plans on investing $12.5 million to redevelop the facility, which was closed in May 2009. Buffalo Shredding expects the new facility to go into operation by the end of this year.

The facility will be renovated to accommodate the purchase and installation of a 4,000-horsepower shredder-motor and metal-separation processing system. The renovation will include the installation of new lighting, pumps, motors and air-handling equipment.

“The Power Authority is pleased to play a part in bringing into operation the new metals recycling facility and contributing to an industrial process that conserves vital natural resources,” says Richard Kessel, NYPA’s president and CEO. “The savings from the low-cost Niagara hydropower will help Buffalo Shredding manage its operating costs in a commodities business known for narrow profit margins and volatile raw-material prices. The hydropower provides important support for the company’s initiative in Hamburg.”

Metalico and its affiliates also plan to acquire and maintain a private fleet of railcars to serve the new recycling facility’s operations and supplement the capability for moving materials and products through South Buffalo Railroad. The NYPA estimates that about $1.5 million a year in new freight business is expected to result from the delivery of the scrap metal to the recycling plant, and from the transporting of the facility’s output to steelmakers and other industrial customers, mainly in New York and Ohio.

“This new metals recycling facility is bringing new life and new jobs to an empty site that was once bustling,” says State Senator Timothy Kennedy. “By taking a vacant industrial facility and putting it to good use, Buffalo Shredding is highlighting the opportunities for economic rejuvenation and job growth that can be achieved through creative re-use initiatives like this. The strategic use of low-cost hydropower will help our region capitalize on the potential of this industry. I want to thank the Power Authority for its support of this endeavor.”