March/April 2001
By Si Wakesberg
Si Wakesberg is New York bureau chief for Scrap.
What do you expect to find in the Netherlands? Windmills? Yes. Tulips? Uh huh. Paintings by Rembrandt, Vermeer, and Van Gogh? Sure. But how about large and impressive primary and secondary metal companies?
Well, you might not think so, but that’s exactly what I found on a recent trip to Europe. Somehow, I didn’t expect the Netherlands to be such a force in the metals industry. Yet it is, with a surprising number of significant companies, and a traveler doesn’t have much difficulty finding them.
During my recent holiday—in addition to touring several first-class museums—I made a point of visiting three Dutch metals firms.
Billiton Plc. One of these was Billiton, whose marketing office is based in The Hague, a lovely, civilized city that houses the Dutch government and foreign embassies as well as important art museums, a residential orchestra, and many fine restaurants. Talking with Peter Cranfield, manager of planning and market research, about the company’s vast worldwide operations is to recognize the international character of the metals industry.
Billiton, either alone or in partnership with others, deals in aluminum, nickel, zinc, chrome, cobalt, copper, manganese, titanium, and more. But it’s the geographic spread of the firm’s resources that gives it an undeniable international tone. Its alumina and aluminum come from Australia and get smelted in South Africa and Mozambique. Nickel is brought out of Western Australia. Copper is now being mined in Canada. Zinc is from the Yukon. Billiton has entered into agreements with Alcoa, Mitsubishi, Rio Algom, and the governments of South Africa and Mozambique, among others, as well as mergers with companies like QNI.
“In the top 100 companies on the London Stock Exchange,” Cranfield noted, “there are only three metal companies: Anglo-American, Rio Tinto, and Billiton.”
Last year, the company opened its Mozal aluminum smelter in Mozambique. This operation was expected to reach its full annual capacity of 250,000 mt by the end of the first quarter, a company spokesman said. According to a report by Billiton Chairman Brian Gilbertson, “total South African output has grown from almost nothing to over 800,000 mt per annum (over 41/2% Western World production) in less than five years.” He added that aluminum has been one of Billiton’s great success stories.
Billiton has moved strongly into the nickel business, said Cranfield, estimating that the company now ranks fourth among world producers. The firm also has a stake in stainless steel through its partnership in Anglo-American and is a factor in ferroalloys. Billiton, in fact, is reportedly expanding its ferronickel plant in Venezuela.
Hunter Douglas Metals B.V. On a rainy, blustery January day, I made my way to the port at Rotterdam to visit a company we know quite well in the United States—Hunter Douglas, which is known all over Europe for manufacturing venetian blinds.
Nick Roe, a trader with the company, took me on a tour of the company’s architecturally imposing building in which it transforms secondary aluminum into its final product.
Neat, sparkling-clean aisles and floors, pleasant lighting, and open spaces all make you think you’re in some comfortable office far removed from production, except that you now encounter equipment and machinery that tell you otherwise. Furnaces emit flames as metal is poured, and a series of electronic devices control these operations.
Offering some market observations, Roe noted that “there’s more direct buying of scrap by consumers in Holland and perhaps all over Europe.” Remelt grades of aluminum usually follow aluminum prices set by the LME, he said. Also, he doubted whether the LME’s secondary aluminum contract would be successful “until scrap itself is tradable on the exchange,” echoing statements made by a number of U.S. secondary smelters.
At the time of my visit in early January, the European aluminum market was still upbeat, with Roe noting that virtually no Russian aluminum scrap had shown up in Europe since April 2000. And it may be some time before it does: In April 2001, Russian lawmakers overrode a veto by President Vladimir Putin and banned nonferrous scrap exports until 2005.
The recent surge of mergers and acquisitions, meanwhile, has resulted in a loss of traders in Europe, Roe reported. In a broad view, however, looking at the aluminum trend at the start of 2001, he foresaw aluminum continuing to move in a volatile but upbeat market.
Roba Metals B.V. It’s about an hour’s drive from Rotterdam to IJsselstein, home of Roba Metals. My Dutch friend Fred Nijkerk, a well-known scrap industry expert, volunteered to drive and knew the way without a map.
Roba is one of Europe’s principal shippers of aluminum scrap, and I was particularly impressed with the company’s size and operational efficiency. After a tour of the plant, we sat down to talk with two directors of the company, Hans van Barmen’t Loo and Brent Richheimer.
“We link our metal prices to LME’s prime aluminum price,” noted Richheimer. Both he and van Barmen’t Loo stressed the impact of currency on the metal markets and indicated their firm belief in the future of the euro.
The company ships more than 40,000 mt of aluminum scrap annually, exporting material to Europe, India, and Southeast Asia. In addition, Roba produces 21 kinds of aluminum alloys. The firm also handles other metals such as copper, Richheimer said, adding that some copper consumers have recently tightened specifications for their scrap purchases.
“Scrap is not waste,” stated van Barmen’t Loo, echoing ISRI’s sentiments and expressing his dissatisfaction with European government regulations. “Their rules are not realistic and are threatening our business.”
I was only able to visit with these three companies during my recent trip to the Netherlands. There are others, of course, and I hope to visit them as well on some future occasion. •
What do you expect to find in the Netherlands? Windmills? Yes. Tulips? Uh huh. Paintings by Rembrandt, Vermeer, and Van Gogh? Sure. But how about large and impressive primary and secondary metal companies?