Sims swaps assets in Houston area

Australia-based Sims Ltd. says it has entered into an agreement to purchase assets of Galena Park, Texas-based Tri Coastal Trading LLC (TCT”) for $66.5 million, calling the move “a key component to consolidating its Houston operations and significantly reducing its operating cost base.”

Sims says it also will pursue the sale of its nearby Mayo Shell Road location, which like TCT is located in Galena Park, which is about 12 miles from  Houston.

“The proceeds from Mayo Shell will substantially fund the acquisition of TCT,” states Sims, which operates metals recycling facilities in North America, Australia and New Zealand and electronics recycling services there and in Europe.

Sims describes TCT as shipping in excess of 350,000 metric tons of processed obsolete scrap annually. In 2024, TCT announced it had secured a long-term storage and handling agreement for a dedicated dock at the Enstructure Richardson Woodhouse facility at the Port of Houston site in Galena Park.

On its website, TCT describes itself as having an “independent, family business mentality” and as for more than a decade trading scrap in the United States, Mexico and overseas while growing “into the largest independent recycler in Texas, with a revenue $350 million-plus and annual tonnage exceeding 800,000 tons.”

Sims calls the consolidation of Sims’ Houston ferrous operation into the TCT location and the transfer of the TCT Enstructure LLC service agreement to Sims a key component of the transaction.

“We have been looking for a solution to our Houston business for some time,” says Sims CEO and Managing Director Stephen Mikkelsen. “Houston is the fourth largest city in the U.S. and Texas’ GDP is $2.5 trillion, the second largest in the U.S. While we have made significant progress in turning our Houston business around over the last two years, its ultimate potential was always hampered by the lack of a deep-sea dock, which would have only been achievable with significant capital expenditure at our Mayo Shell site.”

Continues the CEO, “TCT is an ideal solution to this problem. We free up all our Houston land for sale, avoid significant capital expenditure on the current facilities, significantly reduce our cost per ton, and meaningfully grow our [earnings and return on capital].”

Sims describes the Mayo Shell Road site as a surplus, non-operating land asset, the marketing and sale of which may take up to 18 months to complete. “These divestments form part of Sims’ ongoing portfolio management approach, focused on optimizing the asset base and recycling capital into higher-return opportunities,” states the company.

In an investor presentation on the transactions, Sims says the moves will allow it to ship cut (sheared and baled) grades of recycled steel and says the port operations contract runs for a term of 18 years with two 5-year extension options.

The moves also are designed to help Sims expand its market share of ferrous scrap sourced in Texas and to deliver “material cost savings through operational efficiencies.”

“The consolidation to the Enstructure facility will provide significant operating and administrative cost savings and will expand Sims’ logistics capabilities to source and ship scrap metal by truck, rail, barge and bulk, both domestically and internationally,” states the company.