July/August 1997
Amidst the snow-capped peaks of British Columbia, CARI’s annual convention explored the new horizons that confront the recycling industry, from changing environmental regulations to succeeding in the global economy, from buying insurance to detecting radioactive material.
By Robert L. Reid
Robert L. Reid is managing editor ofScrap.
Nestled between two white-capped mountains, where snow falls even in June, the Chateau Whistler Resort in Whistler, British Columbia, played host this year to the 56th annual convention of the Canadian Association of Recycling Industries (CARI) (Don Mills, Ontario).
Whistler was an especially appropriate site for this scrap recycling summit, held June 6-9, because the village of shops and restaurants adjacent to the convention hotel was built on land reclaimed from an old dump, explained CARI President Roy S. Merritt of Rypac Aluminum Ltd. (Surrey, British Columbia).
Although that fact was not readily apparent to attendees, they could hardly miss the blue recycling bins that greeted guests in their rooms, as well as the tags (made from recycled plastic bottles) that urged guests to recycle (OK, reuse) their bathroom towels to avoid unnecessary laundering. As Whistler’s mayor explained, Canada is trying to cut its waste stream in half by 2000—an ambitious goal that echoed the convention’s theme of helping recyclers face their “New Horizons.”
Redefining Environmental Rules—One at a Time
Surrounded by majestic mountains and soaring trees, it was easy for CARI attendees to focus on environmental concerns and how they affect scrap processors. Harry Vogt from the Environmental Protection Department of British Columbia’s Ministry of Environment, Lands & Parks discussed a package of proposed changes to Canada’s federal environmental regulations. Of particular interest to scrap firms was the proposal to replace Canada’s current hazardous waste test with the U.S. EPA’s toxicity characteristic leaching procedure, or TCLP—but with exemptions for certain recyclables. These include scrap metal, scrap automobiles, UBCs, railroad boxcars, TVs, copper, and electronic scrap, among other products. “We’re planning to make it very clear and explicit that these kinds of commodities do not have to go through that kind of hazardous waste testing,” Vogt explained.
But before Canadian scrap companies get too enthused by this news, Vogt clarified that the proposals are just works-in-progress that must first be approved by a gauntlet of 13 provincial, territorial, and federal ministers, and then by the federal cabinet. The proposals should be in the draft amendment stage by September, with an eye on final adoption nationwide in March 1998, Vogt said. He also explained, however, that the proposed federal changes represent just one layer of Canada’s extensive regulatory system and would not block any regional pollution abatement or prevention measures.
Facing the Radioactive Scrap Threat
Radioactive, or “hot,” material was another hot environmental topic discussed in Whistler. Steve Steranka of Radd/Comm Systems Corp. (Brampton, Ontario), a manufacturer of radiation detection equipment, pointed to a growing number of radioactive contamination cases around the world, ranging from 33,000 shovel blades in Ohio that were made from cobalt-tainted scrap to a disaster in Brazil in which five processing plant workers died when a sealed container of cesium broke open.
After emphasizing that “it takes only a few grams of these radioactive materials to shut down a plant,” Steranka outlined his recommendations on how to use radiation detection equipment in scrap recycling operations. Start by locating detection devices at all points where scrap enters and leaves your facility, such as the scale, he said. Make sure you use a microprocessor-based system sensitive enough to detect low levels of radiation, especially for sealed sources of radiation. If possible, place large detection panels with big surface areas on each side of the vehicle carrying the scrap, as radiation diminishes quickly over distance, he explained. If a large system is too expensive, you should at least scan the material with a hand-held detector. Scan the vehicle slowly, and install speed bumps or other measures to ensure that the vehicle slows down during scanning. Finally, train as many employees as possible how to use the system and establish safety procedures for employees to follow if the alarm goes off, Steranka suggested.
Adding to the discussion on radioactivity, Stuart Hunt of Stuart Hunt & Associates (St. Albert, Alberta) examined naturally occurring radioactive materials, or NORM, and the potential liabilities resulting from mismanagement of NORM problems. As an example, he noted a Canadian shredder operator who discovered a NORM source too late and then spent a week cleaning up his equipment.
While truly natural occurrences of NORM sources are usually not hazardous, problems arise when human activity concentrates these sources into what are called technologically enhanced natural radioactive materials, Hunt said. He warned scrap processors to watch out for technologically enhanced NORM sources in material from obvious candidates—such as uranium mining operations—as well as less predictable industries, such as aircraft engine manufacturing, which uses thorium in engine blocks. Other potential sources include material from oil and gas production or processing and the phosphate fertilizer industry, he added.
Speaking on behalf of Canada’s nuclear regulatory agency—the Atomic Energy Control Board (Ottawa)—Eugene Seguin stressed the need to catch radioactive material before it contaminates equipment. If radioactive material enters a shredder or baler, “you can’t avoid a problem—you’ve already got the problem,” Seguin noted.
When an alarm goes off before such contamination occurs—say, when material is just entering a facility—processors should call the appropriate government agency for assistance, he recommended. They could even face potential liability if they detect a radiation source and reject the shipment without notifying government officials or taking any other action, especially if the material then moves to another facility that fails to detect it. But there is a catch: The federal government deals only with radioactive material related to Canada’s nuclear energy industry, which doesn’t include NORM sources. Yet NORM sources accounted for most of the 71 incidents of contaminated scrap recorded as of 1995. And while provincial governments do handle NORM sources, Seguin added, most of those programs are poorly funded.
Insuring Your Truck Fleet
What’s in a name? Plenty, especially when it comes to seeking insurance for your scrap firm’s fleet of trucks. Insurance underwriters often jump to the wrong conclusion when they see words like “salvage,” “waste,” and “recycling” in the names of firms seeking fleet coverage, explained J. Neil Bunting of Bison Inc. (London, Ontario), an independent insurance consulting firm. “They’ll have visions of massive waste dumps, teeming with PCBs, battery acids, radioactive materials, old auto wrecks, carcinogens, paints, chemicals, etcetera.” And how do they see you transporting all these hazards they assume you handle? On “rickety old flatbed trucks” heading who knows where.
Thus, “presentation is everything,” Bunting stressed, and the goal is to work with your insurance broker to present your case in the most attractive and accurate manner. Be prepared to answer questions about what you haul, where it goes and how far that is from your home base, how old your trucks are and what their road-worthiness is, and what kind of driving record and claims experience your drivers have. But beware: Your current insurer may delay sending this information out to stall competitors from giving you a bid, so insist on getting this information as quickly as possible.
To reduce premiums, Bunting said, be ready to accept higher deductibles, enforce maintenance schedules, and obtain current records on all your drivers before they’re hired.
Taking a Risk
Scrap recyclers who wish to practice the “black art of not buying insurance” should learn more about risk management, said A. John Thomson of Lambton-Thomson Associates Inc. (London, Ontario), independent insurance advisers. Risk management, he explained, is both a process and a structure that encourages you to “understand what kinds of things can go wrong in your organization, how badly they can go wrong, and how many things can go wrong at the same time.”
Buying insurance is actually the last approach companies should consider, he said, after things such as self-funding or simply transferring the risk to others (such as when your clients send back a load of processed scrap because it sets off their radiation detectors).
But should insurance seem like the best option, Thomson warned Canadian scrap companies that they don’t buy enough insurance individually to earn special rates or deals. So he suggested that CARI consider a group approach similar to ISRI’s insurance facility, with its strict loss prevention standards and requirement that participants make a multiyear commitment. Although the specific risk retention group structure that ReMA uses is not permitted under Canadian law, CARI is in the preliminary stages of seeking group insurance, noted Len Shaw, CARI’s director of public and government affairs.
Copper’s Two-Pronged Growth
At the CARI meeting’s commodity session on copper, Kevin Weppler of Noranda Metallurgy Inc. (Toronto) asserted that “the single largest impact in the marketplace of the next few years is the anticipated two-prong growth in copper supply.” Growth will occur, he noted, both in copper sulfide concentrate—the primary method of extracting copper from ore, currently representing about 85 percent of world copper production—as well as in solvent extraction/electrowinning, a hydrometallurgical process that currently accounts for about 13 percent of total production but which is growing fast enough to reach 20 percent by 1999.
Global demand for copper should also increase, due in part to low inflation and low interest rates that should boost worldwide GDP more than 4 percent in both 1997 and 1998. Ultimately, copper supply should exceed copper demand—but by how much and when depends on China, whose purchases represent both a “predictably unpredictable” pattern and an “endless thirst” for copper. “It would be very much an understatement to say that China holds the future of this market in its hands,” Weppler stated.
On the price issue, Weppler offered an average copper price of $1.01 a pound during 1997, with the average price falling to approximately 95 cents during 1998.
Waiting on Nickel Supply
The world of nickel is playing a “waiting game” regarding production, explained Brian Shea of Sherritt International Corp. (Toronto). Initial production from Inco Ltd.’s (Toronto) Voisey’s Bay project in St. John’s, Newfoundland, isn’t expected before 1999, he noted, with some analysts expecting no production from the “potentially giant” project until 2000 or even 2001. In the meantime, “we expect the nickel market to be in deficit in 1997 and largely in balance in 1998,” Shea said. “As a result, prices should firm up this year and again in early ’98, with softening toward the end of ’98.”
Factors affecting future nickel prices include the strike that began in early June at Inco’s Sudbury, Ontario, mining, smelting, and refining operations, as well as an announcement that Russia’s Norilsk nickel operations expect to increase their 1997 production 20 percent over 1996, Shea explained.
However, he added that the Russian prediction is difficult to evaluate since Norilsk is facing financial troubles, reflected by its inability to pay employee salaries or even its gas bill.
Shea had good news for suppliers of scrap nickel units to the stainless steel industry, nickel’s principal end-user. Between 1995 and 1996, when the use of primary nickel in stainless steel production fell nearly 7 percent, the use of scrap nickel in stainless steel rose almost 5 percent. Overall, demand for nickel should grow, thanks to anticipated growth in stainless consumption, superalloys used in aircraft, and nickel-containing batteries, Shea noted.
What’s Driving Aluminum?
Providing a glimpse at the aluminum market, Edward G. Cowan of Roth Brothers Smelting Corp. (East Syracuse, N.Y.) reported that cars are expected to contain approximately 300 pounds of aluminum parts by 2000, up from roughly 250 pounds today. Engine blocks and especially cylinder heads will use more aluminum, he said, while manifolds may switch to plastic. And even if electric motors increase in popularity, the overall car would have to become lighter still—opening even more opportunities for aluminum, Cowan said.
Turning to the secondary aluminum smelting market, Cowan predicted that there will be more pounds produced but fewer players involved. The demands of new technology, including pollution controls required under the EPA’s upcoming maximum achievable control technology test, will force some smelters out of the business, he explained.
At the same time, large consumers such as automotive companies will thin the field through their trend toward single-source supplies. Smelters themselves are moving in a somewhat similar direction, Cowan said, noting that companies such as his are forming alliances with scrap providers to buy “significant tonnages of scrap” on a regular basis, month after month.
Let Eddy Do It
Wider is not necessarily better, but speed clearly takes the lead when it comes to eddy current nonferrous separation systems, explained Thomas Wendt of Wendt Corp. (Tonawanda, N.Y.), a manufacturer of eddy current systems and other scrap processing equipment. Wendt demonstrated during the CARI shredder session how an eddy current system with a 3-foot-wide magnet rotor operating at 480 feet a minute would separate 20 percent more material than a 4-foot-wide system running at only 300 feet a minute. He also emphasized the need to perform regular maintenance on eddy current systems, including coating the rotor shell with a ceramic paint, and discussed a new type of belt that can be removed and attached all in one piece, without welding. On the financial side of things, Wendt offered a formula for calculating the return on investment from an eddy current system and demonstrated how a $436,000 investment in such a system could be paid back after approximately 101/2 months of operation.
Making a Mega Move
Sheldon Kumer of Philip Services Corp. (Hamilton, Ontario) reviewed Philip’s recent acquisitions as well as the company’s plans to build what it says will be the largest megashredder in Canada, a $10-million machine with the capacity to process 750,000 mt a year of ferrous scrap.
Philip is also completing an $18-million facility designed to recycle 70,000 mt a year of electric arc furnace dust, with plans to build four similar facilities in the United States. Expect Philip to announce more acquisitions soon, Kumer added, possibly in the secondary aluminum industry.
Working in Economic Time
Michael Walker of the free-market-oriented Fraser Institute (Vancouver, British Columbia) rounded out the CARI convention with a discussion on the switch from manufacturing to service jobs and other aspects of the current global economy.
In particular, he challenged such popular notions as the “fact” that Japan’s economy should be a model for North America and that the switch to service jobs means a lower standard of living for many workers. Walker explained that countries exist in both chronological time (the year 1997, for instance) and economic time (based on factors such as how much of the population works in agriculture, manufacturing, or service jobs, for instance).
Economically, countries progress through stages in which fewer and fewer people work in back-breaking and difficult labor, as found in farms and factories, and more and more move toward what Walker called the more exciting service jobs. His definition of service jobs goes beyond retail stores and restaurants to also include areas such as law, finance, entertainment, and other “knowledge industry” careers.
Based on economic time, therefore, workers in Japan are currently at a level that Canadian workers reached nearly 25 years ago, Walker explained. Meanwhile, Canada has enjoyed a fivefold increase in its standard of living during the same time that service jobs were replacing manufacturing jobs.
By that same measure of economic time, Walker also claimed that child labor is good for developing countries because it provides families with much-needed income. He noted that India is currently at an economic time level that Canada reached 100 years ago, when many Canadian children also worked in factories. •
Amidst the snow-capped peaks of British Columbia, CARI’s annual convention explored the new horizons that confront the recycling industry, from changing environmental regulations to succeeding in the global economy, from buying insurance to detecting radioactive material.