May/June 1991
Committed to the Future--and Survival
More than 3,000 members of the scrap industry demonstrated their commitment to the future by attending the Institute of Scrap Recycling Industries’s (ISRI) (Washington, D.C.) annual convention and exposition in Las Vegas in mid-March.
There, they attended business management seminars; learned the latest market trends for scrap commodities; heard how state, national, and international regulations and legislation will affect them; had the opportunity to trade scrap materials during specially designated times; discussed community relations; and visited the scrap recycling industry exposition--all of which were designed to help scrap processors and recyclers not only survive, but also prosper, through the remainder of the decade.
President’s Breakfast
1990’s Hard Work, Results to Continue in 1991
"We are no longer merely reactive. We have become a catalyst for change. And, as a result, we have won an ever-widening constituency. " With those words, ReMA President David Serls--also president of Colonial Metals Co. (Columbia, Pa.) and L. Lavetan and Sons Inc. (York, Pa.)--captured the convention's theme, "Committed to the Future."
Serls summarized 1990 as a year of hard work and good results. "It has been a hard year, but we, together, have made incredible progress," he said. He pointed with pride to ReMA's achievements in promoting Design for Recycling, noting ReMA Executive Director Herschel Cutler's successful meetings with manufacturing and steel associations. The meetings helped steelmakers see that product design can hinder recycling, which could mean that they "will not have the scrap they need to make quality iron and steel," Serls said. "Design for Recycling is now being recognized as a viable principle by industries around the world," Serls asserted. "Our job in 1991, and in years to come, will be to convert the concept into reality."
ISRI responded as never before to member needs last year, Serls stated, commissioning a new series of material safety data sheets (MSDSs) and holding a plastic seminar and roundtable, among a variety of compliance, lobbying, and educational services.
Cutler noted other efforts the association-through the committed work of its members-has recently undertaken on behalf of the industry. An ReMA ad hoc committee, for instance, he pointed out, reassessed the association's legislative positioning and charged ReMA with becoming involved in all legislative or regulatory activities that might affect the scrap industry. “We will not wait for legislation to be drafted, go through hearings, pass into law, and then react," Cutler said. "We will become involved from the outset."
He noted that ReMA's greatest achievement in 1990 was changing the wording in Rep. Thomas Luken's (D-Ohio) provisioris to a bill to reauthorize the Resource Conservation and Recovery Act (RCRA). Cutler credited this achievement to the personal lobbying efforts of ReMA members and the 3,000 letters they sent to their representatives. "As the phrase goes," he said, "we worked Washington real good."
Despite the association's progress, Serls said, members must be patient. "We still have a great deal to accomplish, and 1991 will be a year of continued action," he concluded. "For ISRI, the key is attitude. We must remain 'proactive.' We must continue to take the responsibility in controlling our own future."
The other ReMA officers spoke via videotaped presentations. ReMA Secretary Shelley E. Padnos, executive vice president and chief administrative officer of Louis Padnos Iron & Metal Co. (Holland, Mich.), reminded members that RCRA is still up for reauthorization and emphasized ReMA's support for Sen. John Warner's (R-Va.) RCRA reauthorization proposal. It would establish a separate subtitle of regulation for recycling, making a clear distinction between scrap and waste. Padnos also noted that a new regulation manual on site management processes, drafted by ReMA's ad hoc regulatory subcommittee, will be released soon.
ISRI Treasurer James A. Fisher, president and chief operating officer of Fisher Steel and Supply Co. (Muskegon, Mich.), described a series of objectives to carry out ReMA's mission: structure the association to promote the full participation of all members, while recognizing the differences between individual members; promote the operating efficiency of members; improve the industry's image; increase ReMA's membership base; increase recycling markets and the demand for scrap commodities; support recycling research and development programs; promote Design for Recycling ; and strengthen ReMA's lobbying efforts, forming coalitions with other groups as necessary.
ISRI Second Vice President D. Cap Grossman, president and chief operating officer of Grossman Iron & Steel Co. (St. Louis), discussed the field representative program, a member service and recruitment effort, noting that ReMA hopes "to provide the Southern and Northern regions of the country with the benefits of field representation in the very near future - "
ISRI First Vice President Arnold Gachman, president of Gachman Metals & Recycling Co. (Fort Worth, Texas), discussed the findings of ReMA's Gallup Poll It revealed concerns about new member recruitment policies; pointed to the need for assistance on environmental issues; indicated member support for roundtables, seminars, and chapter meetings; and noted the need for chapter meetings to be held in conjunction with board of directors meetings. "The Gallup survey, in total, asked important questions and our members responded with answers that were pertinent and honest assessments," he said. "Now, it's our job to respond to their concerns. We will."
Surviving a TV Interview. Following reports from the officers, Arnold Zenker, managing director, Arnold Zenker Associates Inc. ( Boston ), conducted a media relations seminar, showing attendees how to improve their communication skills Good communication is not an accident, he asserted. It is based on what he called the four P's:
Perception. People communicate with their facial expressions, voice, body language, and appearance.
Preparation. Zenker advised scrap recyclers to think of the 20 questions the media would most likely ask them and plan their answers in advance. "Never do anything spontaneous around a reporter, " he advised. "Try to create the illusion of spontaneity."
Presence. How people carry themselves and present their ideas is important.
Practice. "Very little that is good happens by accident," Zenker said.
Zenker also showed a video of a mock interview he conducted with three scrap processors: Larry Cohen, M. Cohen Iron & Metal Co. (Nashville , Tenn.); Jeff Padnos, Louis Padnos Iron & Metal Co.; and Larry Sax, J. Sax and Co. Inc. (Boston). Zenker pointed out their mistakes--to the uproarious laughter of the audience--and then reinterviewed the recyclers onstage to test their newfound skills. The audience applauded their improved performance.
Cohen said the session taught him the importance of image by showing him how he looked on camera. Padnos learned the importance of thinking out answers to questions in advance, he said. And Sax said he had no idea how much he didn't know about media communication.
Precious Metal Spotlight
Mining Company to Concentrate on Gold, Hedging
Thomas Albanese, chief operating officer of Nerco Minerals Co. (Vancouver, Wash.), discussing the silver and gold markets in the last decade, stated that silver production has been a "marginal activity" since 1986, and noted that production costs have recently exceeded the spot price of the metal. Silver's sag, he said, is the result of weak investment demand, a lagging silverware market, and increasing but still weak coinage interest. In addition, he noted, silver is the victim of strong byproduct production--almost 62 percent of silver is now a byproduct of base metal mining, making its cash production cost almost zero. The photographic market has been the metal’s only bright spot recently, Albanese observed.
Silver's predicament can be blamed on the 1980 price run-up, which created volatile and, ultimately, decreasing prices; caused a drop in consumer and industrial demand; and boosted new mining development and silver recycling, thus increasing supply, he asserted. Fortunately, the current price of silver--at a 17-year low--and a decline in silver production growth are beginning to stimulate demand once again, he said, adding, however, "that improvement in demand is just starting and hasn't had much effect on supply yet."
Gold, on the other hand, reacted erratically to the war in the Persian Gulf but has been stronger and more reliable than silver, Albanese observed. In fact, gold has significantly improved its worth compared with silver, he said, pointing out that in the early 1980s a troy ounce of gold was worth about 35 troy ounces of silver, whereas today it is worth approximately 100 troy ounces of silver. He said that gold is more stable because it responds to many other variables than silver and is less affected by supply and demand thanks to its monetary role.
Based on the current market, Nerco Minerals intends to expand its gold production from 180,000 to 350,000 troy ounces per year while limiting its activity in the silver market, Albanese said. "Silver reserves have shown dramatic growth, but, with current prices, our focus is clearly on gold," he clarified.
Albanese summed up by noting that, in today's demanding market, his company will be more opportunistic in industry restructuring and hedging. "Much has been written on what drives metals prices, but face it, prices are uncertain, volatile, and very unpredictable," he noted. "Producers must be prepared to live with this uncertainty and buffer the uncertainty with hedging." To further reduce future price risks, Nerco Minerals could also take advantage of bullion loans and options, Albanese said.
Red Flags to Watch for on Your Financial Statement--Using Your CPA in the 1990s
Getting the Most From Your Accountant
If you're using your certified public accountant (CPA) only as your financial statement compiler and tax return preparer, you could be overlooking a number of financial and management services that can be particularly important to your business's survival in an economic recession.
For instance, said Jeffrey M. Aldridge, a manager at Crow Chizek & Co. (Indianapolis), your CPA should be able to review your financial statements; plot your operating efficiency, leverage, liquidity, and profitability; spot indications of financial weakness; and recommend ways to improve financial strength. Your in-house controller may be able to perform these tasks, but often lacks the necessary time and ability to make comparisons to companies similar to yours, John B. Holdeman, a partner in Crow Chizek, pointed out.
In a sample review of a scrap recycler's five-year balance sheet, Aldridge pointed out the red flag of significant investment in new capital equipment while sales continued to slide down. If sales were low because of inadequate scrap demand, he said, he would recommend potential expense reductions, such as cuts in travel, employee bonuses, and insurance premiums. Reductions might also be made to interest expenses, he noted, by moving material quicker. This might result in smaller profit margins, Aldridge conceded, but could be made up by the interest savings if payments were high. Another way to improve profits is to take advantage of discounts offered by your accounts payable for early payment, a strategy many businesses neglect to use, he said.
In addition to these types of consulting services, some firms--particularly those with specific knowledge of the scrap industry and your business--can offer “innovative” services, said Holdeman. One of the services his firm offers its scrap recycling clients, for example, is suggested controls for scale house payments--"the most critical point, in terms of cash, in your business," he said. In most situations, Holdeman noted, he recommends implementing an automated (or at least a very tight manual) system that reduces the chance for employee fraud by obliging the scale house to pay set prices for scrap.
Many businesses may also find it useful to have their CPAs conduct internal control reviews, Holdeman said. This requires the CPA to make surprise visits to the company to check cash against receipts and other functions. CPA firms, he pointed out, can also assist with tax planning, inventory-level recommendations, employee benefit arrangements, business succession planning, and strategic planning.
How do you select a firm that can handle such a variety of tasks? You should begin by defining the scope of work you want to assign, Holdeman suggested, and compare it to firms' quality of personnel, industry expertise, technical knowledge, and fees. Once you find a firm you feel comfortable with, you should compile an “engagement letter,” he recommended. This detailed purchase order outlines services, costs, and timing, all of which can be updated with a change order. To eliminate any future frustrations, he noted, the engagement letter must be drawn up through open dialogue.
Workshop on Usables
High-Value Opportunities
Two speakers recommended scrap processors take advantage of opportunities to trade in usables, items that have a higher value when sold "as is" for a specific use than when processed and sold as scrap.”
The key to making money from usables, said William Kipnis, president of the service center division, Mandel Metals Inc. (Franklin Park, El.), is selling to get a premium. In discussing aluminum usables, he counseled to begin by knowing what to buy; anything depicted in the catalog of a local aluminum service center probably has a market. Other items may also have markets but are a riskier buy. Aluminum plate-sheets 1/4 inch or thicker-is a good place to start in dealing usables, suggested Kipnis, adding that tubes, tread plate, and painted aluminum are other possibly lucrative markets.
Begin by asking the seller why the item is on the market, Kipnis advised, drawing a clear distinction between surplus production and second-quality products. He said some items might simply be overruns or leftovers, while other materials might be damaged or stained and may or may not have value as usables.
Look for and ask about defects when buying usables, said Kipnis. Common problems with aluminum usables include a white rust that develops when the metal is exposed to water but not air. This rust can appear between stacked sheets, he noted, so one should always inspect carefully. Brown oil stains are another common problem, as is edge damage. When examining aluminum sheet, said Kipnis, look for bowing, the distance between crests of waves that mark this problem. He said another problem, seldom apparent, is sheets not cut squarely; to check this, measure and compare sheet diagonals. These faults may not render the material unfit for sale as usables, but the wise dealer lets his potential customers know about such defects before selling the item, according to Kipnis.
Buyers of aluminum usables are concerned with temper--a physical characteristic related to hardness and strength--which seldom is an issue to scrap consumers, he noted. Usable dealers must learn the temper of their buys, collecting the data from stencils on the products when available or sending a sample to a lab or the customer for testing.
Usables can be sold to a wholesaler or sold retail. The first option limits hassles--and liabilities--while the second often brings higher prices, said Kipnis. If going it alone, he counseled, develop a marketing plan and locate a "niche," be prepared for a high volume of small sales and a need for new kinds of expertise, and buy a computer to handle sales tax and other data.
"If you can dial a telephone you can sell usables," said Gerald M. Cohen, president, Atlantic Stainless Co. Inc. (North Attleboro, Mass.). "It's just another part of the scrap business."
Cohen described opportunities in stainless steel usables, saying usable can be less work than scrap--often requiring no preparation, little storage space, and no minimum-size order for shipping--and can generate greater profits. He noted that stainless usables don't usually have to be kept dry or clean, and sellers can often convince their customers to pay for transportation. Success with usables can allow buyers to pay more for other scrap, giving them an edge, said Cohen. Usables can be anything from a bonanza, he said, bringing in 5 or 10 times the price of the metal if sold as scrap, to material only a few pennies more valuable than scrap.
To sell stainless usables to a distributor, all you need to know is whether or not the material is magnetic, according to Cohen, but the more you know, the better off you are. He recommended that usable dealers take advantage of distributors' experience, asking them about potential markets and requesting higher prices if materials they sell to the distributor test out to be of higher value than they thought. A good distributor will give advice, he said, even if unwilling to buy the material.
Cohen cautioned against selling usables to the public, unless it's done from a separate facility, because of liability problems. He added that those selling to end users must be very careful to know the exact characteristics of the usables.
Cohen also touched on steel usables, saying a large market is available, especially in structural products like beam, channel, angle, and plate steel. But he said, steel rusts, so storage can be a problem. Talk to steel industry customers and send photographs of materials before committing to buy, Cohen advised.
European Scrap Markets: Will They Be Lost?
Free Trade or Bigger Barriers?
Michael C. E. Lion, chairman of Philipp and Lion Ltd. (London) and chairman of the environmental committee of the Bureau International de la Recuperation (Brussels, Belgium), said that the coming European common market's consuming industries will have a large and growing appetite for scrap, especially if industrial competitiveness increases as trade barriers fall He noted that the common market countries have little primary metal resources and that the U.S. scrap industry, as the world's “most sophisticated," is likely to be in good position to satisfy this demand.
Commenting on the clout of a unified Europe , William A. Reinsch, chief legislative assistant to the late Sen. John Heinz (R-Pa.), noted that the common market countries already have a population more than 50 percent larger than that Of the United States and many more countries wish to join.
Lion said Eastern Europe and the Soviet Union provide new opportunities for European trading, but the European Community's members will have a tendency to trade within. This may mean, among other things, fewer European imports of commodities from the Pacific Rim , which raises the question of where these Asian countries will turn their efforts, Lion observed.
Reinsch agreed that a major side effect for the United States of the unification will be Europe 's internal preoccupation. Europe is busy negotiating more than 200 directives to unify its markets while handling other major issues such as the reunification of Germany. This will make it hard for the United States to press its agenda for expanding free trade through the current Uruguay Round of the General Agreement on Tariffs and Trade talks, said Reinsch.
Three world trading blocs are forming, he noted: Europe , Asia , and North America --with recent moves toward U.S./Canada/Mexico free trade. While it's difficult to predict whether this will free or restrict trade, he said, "history suggests" the latter. It's difficult to negotiate with Europe as a bloc because its countries will not negotiate until they have a mandate as a group, and once they have a mandate, they are inflexible in their positions. A new European self-confidence, rising with the formation of the common market, and a large U.S. trade surplus with Europe w also make it tougher for the United States to deal with the group, said Reinsch.
The big question in scrap trade with Europe, said Lion, is what he called "the dreaded Basel Convention" and whether scrap will be treated as waste under this treaty. Once 20 countries have ratified Basel, it will go into effect, prohibiting trade in "wastes" between nations that have signed the treaty and those that haven't, strictly controlling certain potentially hazardous constituents, and allowing participating countries to decide what “wastes" means. The treaty has no exemption for scrap and, Lion noted, there is much resistance to keeping scrap out of the definition of "wastes" in Europe .
Robert C. Reiley, director of the office of metals, minerals, and commodities in the U.S. Department of Commerce's international trade administration, said that improper inclusion of scrap in a European definition of waste would allow some to use Basel to illegitimately block trade.
The Basel treaty was originally designed to limit hazardous waste exports to the Third World , said Reiley, but subsequently took on an entirely different meaning. Reiley predicted that legislation eventually implementing the Basel Convention for the United States will be "far better" than what will develop in Europe . He said the United Stateswill exempt most scrap and limit obligations under Basel to "what we consider hazardous waste." In the United States, there is a growing understanding that scrap should not be treated as waste, Reiley remarked, and "the battle is now moving to Europe."
Reinsch, however, said that Congress doesn't have "any clear understanding" of the issues involved in Basel . He said it's “not on the front burner yet, and it ought to be there."
Lead/Zinc Spotlight
Comparing Lead’s and Zinc’s Strengths
Lead Demand Up. Though lead has fallen into the gunsights of environmentalists, demand for the metal has been growing thanks to its use in products such as ammunition, solders, and batteries, asserted John J.L. Davies, senior vice president, Noranda Sales Corp. Ltd. ( Toronto ).
In 1990, total Western World lead production was 4.4 million metric tons (mt), he said. Of that, the United States consumed 1.28 million mt, he noted, 1.0 million mt of which were used in batteries. Lead demand by the battery industry may soon increase dramatically, he noted, as more electric cars, which require several batteries per vehicle, are introduced.
In 1990, 910,000 mt of secondary lead were recovered, Davies estimated, adding that the recycling rate of spent lead-acid batteries is approaching 100 percent.
Still, the lead industry is facing efforts by environmentalists to “remove lead from all forms of commerce," Davies asserted. “The reason is the perception of environmentalists that large quantities of lead or lead-based waste materials exist in the environment and are hazardous to public health." In reality, he said, the old uses of lead in household paint and gasoline, which caused the most leakage into the environment, have been addressed and curtailed.
Well-Balanced Zinc. Michael L. Deelo, director of marketing, Zinc Corp. of America (Monaca, Pa.), examined the zinc industry's past and future, predicting thal it can expect strong demand for zinc products, adequate mine capacity, marginal smelting capacity, and higher production costs.
Unlike other metals, zinc supply and demand has been in balance since 1950, as consumption has grown at an annual rate of 2.7 percent per year. The metal's two dominant markets are still galvanizing and die-cast alloys, Deelo noted. While the auto industry reduced its use of zinc die-cast parts by 100,000 tons per year in the 1980s, it has boosted its use of galvanized steel for corrosion-resistant applications. "The demand for galvanizing has outstripped capacity and has resulted in crash programs from the steel industry to add new galvanizing lines," he said.
Even though the world zinc market has grown, smelters in the United States have closed and the country now imports two-thirds of its zinc, Deelo remarked. There has been much consolidation among major zinc producers, he said, noting that "all of these changes underscore the point that production of zinc is driven by demand, and producers take whatever steps are necessary to respond to the conditions of the market."
Today, more than 80 percent of zinc is produced in electrolytic plants, compared with about half in 1950. Pyrometallurgical extraction almost became extinct, Deelo said, but the growing need to recycle zinc-bearing hazardous wastes has helped revive it. Zinc recycling will become increasingly important, accounting for 10 to 15 percent of slab zinc produced by the end of the decade, he estimated.
Pricewise, slab zinc has traditionally traded between 50 and 60 cents per pound, but since 1988 it has remained in the 60-to-90-cent-per-pound range in the United States , where it will remain, Deelo predicted. "The markets for zinc appear strong and should continue growing," he stated, speculating that world consumption will rise 2 percent per year and should average no less than 5.8 million mt in the 1990s. Hot-dip galvanizing will continue to represent the single largest market for zinc, with additional growth being seen in brass, zinc oxide, die casting, zinc dust and powder, and rolled zinc. Deelo said that there will be sufficient mining and smelting capacity to support anticipated market growth, but he noted that the majority of capacity increases at smelters will be additions to existing plants.
Ferrous Spotlight
Removing Residual Metals for Scrap Quality
As steelmakers continue to demand higher quality scrap, scrap processors must be more diligent about removing residual metals such as copper, tin, and zinc from the steel scrap they sell, said Richard J. Fruehan, director of the Center for Iron and Steelmaking Research, Carnegie Mellon University (Pittsburgh).
The most promising copper separation technique is sulfide slagging, he noted, which uses low temperature in a rotary kiln and can remove up to 90 percent of the copper in steel scrap in less than five minutes.
Scrap processors will likely have to assume the chore of cleaning copper from their steel scrap, which would mean purchasing a rotary kiln for their operations, Fruehan asserted. His tests have shown that steel mills cannot directly feed steel from a rotary kiln to an electric arc furnace because too much sulfur carries over. The scrap must be cooled and then washed of any residual metal before being charged into a furnace.
Most shredded scrap tends to have a copper content of 0.2 to 0.3 percent, which is acceptable for making rebar, Fruehan said, but deep-drawing steel and other products require a purer feedstock, with no more than 0.06-percent copper content.
The zinc content of steel scrap is increasing due to the growing use of galvanized steel in automobiles and other corrosion-resistant products. Zinc can be removed from steel scrap using an electrolytic process that is basically "electrogalvanizing in reverse," Fruehan explained. The process is effective on No. 1 prompt industrial bundles but not as effective on mixed scrap loads. One Texas company, he reported, is developing a dezincing process that heats scrap in a rotary kiln and oxidizes zinc on the surface or in the vapor phase.
Tin can be removed effectively using an electrochemical process, Fruehan noted. He advised scrap processors to step up their use of steel food and beverage containers because the products are made of high-quality steel.
These separation techniques can be economical if the treated scrap can be sold for $15 to $20 per ton more than untreated scrap, he said.
Fruehan closed by asserting that scrap processors must become increasingly more quality-conscious to prevent iron carbide and direct-reduced iron from capturing consuming markets. As steelmakers and manufacturers implement more and more quality assurance programs, as industrial prompt becomes scarcer due to improved manufacturing efficiency, and as higher-quality steelmaking processes replace coke furnaces, scrap quality will become even more important, Fruehan stated.
Aluminum Spotlight
Looking Up for the Long Term
“I think this is the decade of aluminum,” said Paul Drack, president of Alumax Inc. ( Norcross , Ga. ). "I think we're all going to make money in this decade." The current market situation, however, is less cheering, according to his report.
The aluminum market has been weak since the last quarter of 1990 and is likely to drop further before slowly beginning to turn itself around later in 1991, according to Drack. "We all know this will be a tough year," he said, but 1992 will be "better" and 1993 and beyond should be "great."
Aluminum has recently languished as a result of a sluggish world economy whose growth has slowed to about 1.5 percent annually, he said, noting that only packaging continues to bolster aluminum. Overall, aluminum consumption has been flat, and production will increase only slightly in 1991, Drack predicted.
U.S. aluminum shipments were down in 1990 and will drop a bit further---about 1.9 percent, to 14.1 billion pounds--in 1991, he said. Things should pick up after that, however, and shipments should grow to 14.6 billion pounds in 1992, according to Alumax figures. Drack said that transportation will soon join packaging as a healthy market segment. Construction activities will be slower to pull out of the current recession, he predicted, so this segment will not show improvement until 1993.
Drack said that a gradual U.S. business turnaround, followed by growth elsewhere m the Western World will strain inventories and push spot prices on the London Metal Exchange (LME) for aluminum up for several years, despite some increases in production--unless capacity expands rapidly.
Stocks are low at consumers, he reported, but not so low at producers. He predicted the LME spot price for aluminum will average approximately 73 cents per pound for 1991, a cent behind last year's figure. Looking further ahead, he predicted an average price of 82 cents for 1992 and 93 cents within three years.
Environmental Community Discusses the Agenda of the 1990s: Decade of Implementation and Innovation
Seeking Common Ground
Scrap processors and recyclers are increasingly finding themselves in two worlds-one foot is firmly planted in the recycling business, the other in the newer territory of environmentalism. As never before, the scrap industry is addressing environmental issues and establishing dialogues with environmental groups, working to achieve mutually acceptable goals.
The industry seeks to strike a balance between realistic protection of the environment and optimum promotion of recycling, said Herschel Cutler, who noted that ReMA has made great strides assisting members with environmental issues. The association has created a new series of MSDSs, is investigating alternatives to landfilling shredder fluff and other processing residues, and has been working to change regulations that unfairly restrict the level of heavy metals in scrap and processing residues.
Cutler also emphasized ReMA's continued work to make sure that scrap is not categorized as waste in RCRA, noting, "If the industry is to remain viable, that concept must be changed." He argued that recycling residues must be recognized as the natural result of a positive effort and, thus, should not be penalized at the time of disposal.
Alan Hershkowitz, senior staff scientist, Natural Resources Defense Council ( New York City ), discussed some of his organization's priorities, including shifting the coordination and cost of recycling programs away from municipalities to the private sector and manufacturers. In his videotaped presentation, he lauded ReMA's Design for Recycling concept, while also calling for environmental claim labeling standards, material use reporting, and stricter financial liability standards to be imposed on manufacturers. Hershkowitz also proposed adding a "disposal" charge to the cost of some products to help industry build an infrastructure for the collection and recycling, treatment, or disposal of the goods.
To expand recycling, government and business should finance legitimate recycling technology development, he said. A virgin materials tax could also help establish cost equality between recycled and virgin materials and create a disincentive for manufacturers to use virgin materials. Hershkowitz also suggested revising interstate transport rules to allow good states to have more control over what is dumped within their borders than "bad" states, thus encouraging "bad" states to improve their recycling and disposal practices.
On the legislative level, he called for putting "the resource conservation back into RCRA." Part of this plan is to prevent the "misrouting" of recyclable materials such as glass and metals to incinerators because those materials are not combustible and, thus, he said, can create hazardous ash. Hershkowitz, in fact, said that no new municipal combustors should be established until "we clean up our act" at the current ones.
In a taped presentation, Karen Florini, senior attorney with the Environmental Defense Fund (EDF) (Washington , D.C.), surveyed the 1991 legislative agenda and noted that RCRA reauthorization, the Clean Water Act, and lead reduction will be major issues. EDF is excited about Design for Recycling, TM she said, viewing it as a way to reduce the amount of toxic material entering the waste stream. Florini said she is working to promote the creative use of incentives to enhance recycling, increase the public information requirements under Superfund, and plug loopholes that are allowing certain toxic wastes to go unregulated.
David Loveland, executive director of the National Recycling Coalition (NRC) (Washington, D.C.), moderated the session and spoke about the NRC's mandate and some of its recent projects, including drafting a national definition of recycling; creating "green labeling" standards; examining state and municipal percentage recycling goals; studying interstate transport issues; promoting office. paper recycling; and exploring virgin material taxes. NRC seeks to establish "a common agenda to promote the long-term viability of the recycling industry, " Loveland said, calling on differing groups to come together to achieve a common vision.
Examining RCRA reauthorization, Lynn Schloesser, associate counsel with the Senate Committee on Environment and Public Works, noted that RCRA has little definition compared with the Clean Air Act, which spent 10 years in legislative limbo before being passed last year. Despite all the talk about recycling incentives and virgin material taxes, no clear proposals have been introduced in writing for inclusion in RCRA, he said. ReMA has defined its concerns clearly, but it must work to find more common ground with environmental groups, Schloesser advised.
David Serls pointed out that ReMA intends to implement a "full-court press" to achieve its legislative goals in 1991 and beyond. He noted the unfortunate-and unexpected-reauthorization of Superfund and vowed that ReMA won't let that happen with RCRA. "We get the laws we let happen,” he said.
Nickel and Stainless Spotlight
Positive Signs Noted for Nickel, Stainless, and Cobalt
Nickel Bypassing Recession? While the automotive, construction, and chemical industries--all significant consumers of stainless steel (which accounts for 60 percent of nickel demand)--are in a recession, the nickel industry appears to have bypassed that recession, according to Neil Buxton, director of metals and mining research for Lehman Brothers International ( London ).
Buxton noted that cash nickel prices averaged $3.91 per pound in January-February 1991. "To put this in perspective," he offered, "nickel prices averaged $2.11 between 1982 and 1986." (Since Buxton's talk, LME cash nickel rose to $4.14 on March 24.)
The nickel market has been spurred by a tightening of supplies, low inventories, a temporary lull in Soviet shipments, and high utilization rates, Buxton said. Stainless has grown at an average rate of 5.4 percent over the last 30 years, he noted, and nickel has grown 3.9 percent.
Despite the good long-term fundamentals, Buxton noted that "the nickel market is not immune to recession and we are likely to have a period of weakness in the summer months." He indicated that if there is a sharp drop in demand, producers will cut back. Falconbridge, in fact, he noted, has stated that "if the price falls below $3.50 per pound, it will halt some of its operations." The big unknown, he said, is Soviet nickel. Marketing problems hampered Soviet shipments in the first quarter of 1991, but if the Soviet nickel facilities operate normally, he declared, they can produce "in excess of 200,000 mt per year."
Because of low inventories, Buxton said, price volatility exists in nickel. "A small change in inventories or sentiment can lead to large swings in price levels, "he pointed out. For 1991, he estimated a surplus of 2 1,000 mt, or 3 percent of the market, and forecast an average LME price of $3.75.
Annual Growth for Stainless. In the past decade, processing costs in the stainless steel industry have come down substantially, but raw material costs have risen sharply, in part because of a "spectacular" increase in productivity, declared Rover V. Mellon, industrial consultant, Mellon Associates (London).
Meanwhile, raw material costs, including stainless scrap costs, have risen sharply, he said. Scrap represents approximately 43 percent of nickel consumption, he estimated, of which about 27 to 28 percent is purchased scrap.
For the remainder of the decade, Mellon said, "it is likely that new-scrap sources will continue to decline [their share of the market] significantly (to 25 percent), and the share of old scrap will rise, reversing earlier proportions."
Mellon predicted a 4.5 percent annual growth rate for all grades of stainless until 2000 and anticipated "little risk of prices going crazy in the short term" (1991 through early 1992). For the medium term (1992 and 1993), he foresees stainless demand once again accelerating. However, he warned, "if, as an industry, we do not achieve the desired match of new producing capacities for raw materials with stainless demand, it is likely that the terminal market indicator for nickel will again climb to dangerous heights.”
Cobalt Prices Heading Upward. Cobalt prices are on an upward trend because of production problems in Zaire and Zambia, which produce nearly 70 percent of the world's cobalt, according to William C. Thiede, president of Powmet Inc. (Pittsburgh). Thiede forecast a producer price of $13 to $15 per pound before 1991 is over and predicted "producer prices as high as $18 per pound before they begin to subside." On top of that, he said, he would not be surprised to see a free-market price exceeding $20 per pound.
Higher producer prices will cause problems in getting sufficient supplies for many consumers, he indicated, since 70 percent of the world's major consumers are under contract with producers. The cobalt consumers dependent on free-market supply also will have difficulties in securing needed material, Thiede said. "Allocations are, and will continue to be, a way of life as we operate through the 1990s," he explained.
Thiede outlined the major elements that make up today's world cobalt market, including differences between the principal cobalt producers and byproduct producers, political unrest in producing countries, and transport problems in landlocked producing countries. He anticipated a drop in 1991 production levels by about 2,500 mt, to around 7,000 to 7,500 mt, by the major producer Gecamines. "This, coupled with an already existing squeeze on supply, appears to provide for the anxious moments in cobalt supply," he declared.
An Introduction to COMEX
Minimizing Business Risk
COMEX--Commodity Exchange Inc. (New York City)--provides a mechanism for those in the metal industries to the risk of price changes on their business planning, said Robert Klide, COMEX manager of metal marketing. COMEX also functions to rapidly disseminate price information resulting from its transactions around the world.
COMEX is the world's most active metal market; last year 350 million contracts representing "trillions" of dollars were traded on the exchange, said Klide. "Even if you don't hedge," he said, "COMEX affects you" because of the role traders play in determining metal prices. COMEX is a not-for-profit organization; doesn't buy, sell, or own commodities; and doesn't influence market prices, according to Klide.
Futures contracts for gold, silver, copper, and aluminum are traded through COMEX in units called "contracts," all of which are identical for any given metal--standard size, grade, and so forth. Buyers and sellers only negotiate the number of contracts involved in the transaction, the month of delivery, and the price, he explained. Though the vast majority of contracts never result in the physical movement of metal, for those that do, the seller can deliver to any warehouse in the COMEX network and at any time during the month specified by the contract. The buyer has no choice of delivery location, or brand of material.
Only members of the exchange can trade on the floor. To trade, individuals must open an account with one of the 772 member firms. Exchange participants include hedgers, speculators, and floor traders-who may work for themselves or represent outside accounts. Hedgers are in the business to limit risks; speculators, who participate to profit by anticipating price movements, provide a market for hedgers. Each trade must have a buyer and a seller, he said, and any participant can buy and sell on the floor at any time.
The typical transaction begins when a hedger calls a broker requesting a trade. The order is wired to a member firm and, dispatched to a runner who takes the order to the floor of the exchange, where a broker executes the transaction. The details are quickly reported and information is double-checked for accuracy. This information is distributed within seconds, influencing posted prices.
A third party, called a clearing association, participates in all trades, ensuring that all obligations will be fulfilled in case of a default. The buyer and seller typically have nothing to do with each other once the transaction has been concluded on the floor.
Hedging is "establishing a position in the futures market that is equal and opposite to a position held in the actual commodity," according to a COMEX brochure. The goal is to limit the risk of commodity price volatility by fixing a future price for goods in today's market, according to Klide.
For example, a manufacturer that will need a certain amount of metal at a future date can limit the effect of future price changes by buying futures contracts. If the price of the commodity the manufacturer is planning to purchase increases, the manufacturer will have made money in the futures market to offset the higher price that must be paid for the commodity in the cash market. If, instead, the commodity price has fallen, the loss on the futures market would be offset by the lower price needed to buy the commodity in the cash market at that time. The objective is to establish opposite positions in the cash and future markets so that a loss in one is offset by a gain in the other.
Ad Hoc Tire/Rubber Committee Meeting
Marketing Scrap Tires
Where are the markets for scrap tires? According to Michael Blumenthal, executive director of the Scrap Tire Management Council (Washington, D.C.), there are two potential large-scale recovery markets for the material: as a fuel for cement kilns, power companies, and pulp and paper mills and as crumb rubber for use in asphalt pavement. Crumb rubber is scrap that's been processed down to a particle size of less than 5/8 inch.
Recovering energy from tires at cement kilns seems particularly promising, Blumenthal said, because the steel in steel-belted tires needn't be removed and can actually be used as a substitute for the iron ore normally needed by those kilns. If a quarter of the cement kilns in the United States were to use scrap tires as fuel, he estimated, they would consume 60 million to 75 million of the approximately 250 million scrap tires generated annually.
The rubberized asphalt market has been plagued by inconsistent results from test applications. Nevertheless, Blumenthal predicted, "crumb rubber in asphalt should take off in three to seven years." At the same time, he said, the number of facilities using scrap tires as fuel should decrease. Parking lots, driveways, and other privately owned asphalt surfaces will likely represent the first ma or use of asphalt rubber, he noted, since, unlike government road use, they don't require bureaucratic approval of the product.
Currently, only 1 to 2 percent of the material that goes into a new tire is recycled rubber, and Blumenthal expressed little hope for expanding this market since the higher the percentage of secondary rubber in a tire, the less lifetime mileage the tire offers.
Scrap processors seeking to market scrap tires should follow the five P's, Blumenthal said:
Product. The simplest concept of all: Meet the consumer's specifications.
Price. This must reflect the costs of competitive materials--coal in fuel applications and new rubber in crumb rubber applications.
Place. Tires are bulky and expensive to transport, so proximity to supplies and end users is vital.
Promotion. End users won't know of your supply unless you tell them.
Permitting. "This is probably the single most important thing," Blumenthal noted. If your state requires a permit for storing tires (and many do), you must get one or risk being shut down with little chance of ever getting a permit.
Plastic Spotlight
Polystyrene Recycling Opportunities
"The clear step needed today is to accelerate the recycling rate for all plastics," said K.D. Hannan, business director for resource recovery and conservation, Dow Plastics (Midland, Mich.), adding, "We see plastic recycling as an opportunity for entrepreneurs and investors."
Hannan centered on the recycling of polystyrene because that material, in the form of disposable cups, plates, clamshells, bowls, and utensils, has become a symbol of our "throwaway society." To help change public opinion and expand polystyrene recycling, eight polystyrene-producing companies--including Dow--have established the National Polystyrene Recycling Co. (NPRC) (Lincolnshire, Ill.). NPRC's goal is to recycle 25 percent--or 250 million pounds--of polystyrene food and packaging products annually by 1995.
Polystyrene scrap recycled by NPRC is collected from restaurants, schools, and other institutions, not through curbside recycling programs, Harman pointed out. The goods are sorted, then broken down into fluff, melted and molded into solid pellets, and sold for reuse in such products as videotape cassettes and garbage cans. By the end of 1991, the company will operate seven facilities in or near Los Angeles, San Francisco, New York City, Boston, Chicago, Philadelphia, and Portland, Ore.
Scrap companies could enter the polystyrene recycling market as postcollection sorters and processors. "NPRC will make its technology package available to entrepreneurs seeking to start their own recycling operations," Harman stated. The company will also seek to identify new applications for recycled plastic products and develop reliable markets, he said.
Harman also discussed the recycling of postconsumer high-density polyethylene (HDPE) and polyethylene terephthalate (PET) products. Approximately 28 percent--or 195 million pounds--of PET soft drink containers are recycled each year in the United States, he said. Within five years, that total is expected to reach about 400 million pounds per year, for a 50-percent recycling rate. HDPE recovery has reached more than 145 million pounds per year, he noted, and has the potential for recycling up to 600 million pounds per year by 1995.
"Overall, almost 500 million pounds of plastics were recycled last year," Harman stated, adding that the Environmental Protection Agency (EPA) estimates that within five years "about 2.6 billion pounds of plastics will be recovered from a total market of 60 billion pounds annually."
Harman closed by observing that "plastics have sadly become the symbol of a much greater environmental problem," saying that legislators and the public have tried to restrict the use of plastics as a “quick fix” to the waste crisis. As a result, plastic growth will be slowed, he predicted, until Dow, NPRC, and others in the plastic industry can create "a new identity for plastic as a recyclable material."
Ad Hoc Glass Cullet Committee Meeting
Glass Makers Seek Quality Cullet
Glass container manufacturers are seeking more postconsumer glass and actively promoting new glass collection programs for recycling, according to Chaz Miller, director of recycling for the Glass Packaging Institute (GPI) (Washington, D.C.). Less industrial scrap glass is available today because of increased efficiency in the packaging industry, Miller noted; however, public enthusiasm for recycling is boosting the supply of postconsumer glass.
He reported that scrap now makes up about 30 percent of the content of new glass containers, and most of that is postconsumer material. Although 100-percent scrap cullet products are possible, he said, a 70-percent content is a more realistic goal for the industry. Consistent scrap volume and quality are key to limiting problems in a manufacturing process that is still "more of an art than a science," Miller said.
Historically, container makers have not been enthusiastic about scrap cutlet use, a reluctance that led the industry to examine alternate uses for secondary glass during the 1960s and 1970s, Miller said. The high cost of machinery and the fact that scrap cullet is not furnace-ready, as are other raw materials used in glass making, slowed acceptance of recycling by glass producers. Today, the industry sees a variety of advantages to using scrap, including the increasing supply of postconsumer glass available and the ability to run glass furnaces at lower temperatures when using scrap, saving energy and extending furnace life.
Despite the glass industry's growing enthusiasm for recycling, Miller noted, suppliers must realize that scrap cullet faces tremendous competition from other raw materials--such as sand--that are quite inexpensive.
GPI is studying curbside collection programs and providing advice to local authorities, promoting curbside separation as an alternative to bottle bills (though Miller said, "I think the whole deposit movement has pretty much shot its wad"). The group avoids spreading a "gold in garbage" myth, he noted, and warns local governments that a realistic goal--such as expecting the recyclables' value to pay for half of the collection program--is more likely to result in a surviving program.
Unions representing the glass makers are also promoting glass recycling and have created a fund, filled by a dime from the hourly salary of each worker, to promote state and regional recycling programs, Miller reported. Each plant also has a scrap cutlet awareness committee to promote glass recycling and counsel cutlet collectors on how to improve quality by avoiding contamination and breakage.
Miller noted that the industry faces a tremendous oversupply of green cullet compared with limited demand for green bottles. Though only 10 percent of new glass is green, he said, green scrap cutlet makes up about half of the supply of all scrap glass available. In an effort to standardize glass color, Miller noted, most of the glass companies are involved in research to produce an effective coating to color glass.
Alternative markets available for used glass are not yet a worthy option, he said. "Glasphalt" and similar applications compete with such low-value raw materials that they provide little attraction for scrap cutlet suppliers.
Copper Spotlight
Red Metal Optimism
Worldwide refined copper consumption grew at a compound rate of 4.1 percent between 1983 and 1990--exceeding forecast demand for four years straight--according to Robert J. Bothwell, vice president of sales, Asarco Inc. (New York City), who noted that mine and refined copper production have been below forecasts-and below consumption-since the mid-1980s. This has put scrap copper in a position to fill the gap, he said.
Will this trend continue? According to Bothwell, mine and refined production should increase slightly in 1991, while worldwide consumption is expected to grow by as much as 2.8 percent per year through the 1990s. The largest demand growth segment, he predicted, will continue to be in Asian markets, which have increased their copper consumption 6.2 percent since 1980. While Japan accounts for approximately 60 percent of the Asian consumption, South Korea , Taiwan , and India have seen the most dramatic growth and should not be overlooked, he pointed out. In addition, he alerted attendees, if China , "the sleeping giant in the copper industry, " were to return to the position it was in a few years ago, it could again take 2 tons of the red metal off the market. Most of the Asian demand will come from electric cable, telecommunications, and building and magnet wire industries, he said.
While Asian demand has taken an increasingly larger chunk of total worldwide consumption, the U.S. share of consumption has declined, Bothwell said. On top of that, he noted, the United States is approaching status as a net exporter of copper-- U.S. refined copper imports have declined and exports have risen since 1987. Nevertheless, demand from some segments of U.S. industry has increased dramatically, he said. For example, Bothwell noted, the average U. S. automobile contained 39 pounds of copper in 1980 and 54 pounds in 1990.
The Case for the Mini-MRF
Exploring the Postconsumer Recycling Market
Scrap processors should capitalize on the goldmine of household recyclables by opening small material recovery facilities (SMRFs) in their communities, argued Tom Norton, president of Magnificent Machinery Co. (Cleveland).
Norton estimated that each person in the United States discards 60 pounds of recyclables per year, which translates into millions of tons of materials that scrap companies could recover at a profit by operating SMRFs. Though many large urban areas are currently serviced by large material recovery facilities (MRFs), there are other untapped areas that could be serviced more effectively by several SMRFs rather than one large MRF, he said.
Smaller communities--the processor's backyard--also offer numerous opportunities for privately owned and operated SMRFs, he pointed out. SMRF operators must charge a tipping fee, Norton stressed, because the income from the recyclables alone won't ensure a profit,
Norton characterized a SMRF as a facility of approximately 2,500 square feet with a service base of up to 250,000 people and a capacity of 15 to 40 tons per day. A SMRF can be established for as little as $300,000, he claimed. Large MRFs, on the other hand, can process up to 100 tons per day and cost millions of dollars to build, he pointed out.
Compared with large MRFs, Norton said, SMRFs are easy to site; employ neighborhood people; are "low-tech" and thus suffer minimum breakdowns; can be easily adapted to changing technology; and can be expanded to handle recycling streams from airlines, fairs, and sporting events.
Material for SMRFs is usually collected by the SMRF operator at curbside to guarantee the highest participation rate, Norton said. He reviewed collection procedures, noting that citizens should be allowed to set commingled recyclables at the curb. In some programs, truck crews sort material as they pick it up, which is time-consuming and often inaccurate. In other programs, truck crews dump the commingled material into the truck, which often results in significant glass breakage--in some cases, up to 30 percent. For processors who do not want to deal with curbside collection bins or on-board sorting, Norton suggested another option--curbside collection of commingled recyclables using plastic bags.
Thomas W. Higgins, manager of Hefty recycling opportunities with Mobil Chemical Co., Consumer Products Division (Macedon, N.Y.), handed out transparent, blue plastic Hefty bags to attendees, claiming that bags keep recycling simple for citizens and achieve the best results for the SMRF operator. Plastic bags are inexpensive, he said, and they pose less of a storage problem than bins, are easy to carry, prevent winds from blowing material away at curbside, and prevent spills of residual liquid in cans or bottles. In addition, people are already used to bags, he pointed out, and his research has shown that people hold onto bags longer, reducing the number of homes that need servicing on pickup days. Most importantly, bags can help reduce glass breakage and can be recycled after use.
Higgins said that plastic recycling bags should be transparent and made exclusively of either HDPE or low-density polyethylene to optimize their recycling. Consumers could acquire the bags at their local grocery stores, he suggested.
Can the Scrap Recycling Industry Win in Washington ?
Lobbying and Public Relations Are Essential
If scrap processors and recyclers are going to protect their industry, change public perception, and influence the legislative process, they must become more active in their communities, said panelists and audience members alike at this final session of ReMA's 1991 convention. Moderator Arnold Zenker said that scrap processors must learn the "second language" of lobbying to help close the perception gaps between the industry, legislators, and the public.
Ernest Wittenberg, vice chairman, E. Bruce Harrison Co. (Washington, D.C.), said, "Today, you're regarded as both the problem and the solution. You're the good guys, the recyclers, but you’re also viewed as the polluters."
To change that negative perception, he suggested, ReMA members should see the 435 congressional districts as individual sales territories in which they can promote their industry. "You really are your industry's greatest grassroots asset."
Scrap recyclers should meet with their congressional representatives when the legislators return to their home offices, Wittenberg advised. As voters and employers, recyclers have every right to meet their lawmakers. Also, he remarked, get to know the legislator's home office administrator and staff, as they provide a direct line to Washington ,D.C.
In Washington, Wittenberg noted, compromise has replaced confrontation as the accepted practice, so scrap processors and recyclers should approach their lawmakers with the three C's: caring (about the lawmaker's concerns), commitment (to solve problems through compromise), and credibility (to follow through on resolutions).
Arnold Gachman concurred: “The legislator is your opportunity.” By working with lawmakers on pending legislation, recyclers can prevent harmful regulations from being passed, he said. Evelyn Haught, ReMA public relations director, asserted that “government is confused”; ReMA members can provide the information legislators need to help them vote knowledgeably on recycling-related issues.
So, what's been hindering the industry's grassroots lobbying and public relations efforts? "I think that processors get all juiced up here and then forget what they learned when they return home," said Barry Hunter, senior vice president, Samuel G. Keywell Co. (Port Elizabeth, N.J.), and chairman of ReMA's public relations committee. "We must become 'proactive' or else we’re going to be gone."
Frank Giglia Jr., vice president, Allied Scrap Processors Inc. (Lakeland, Fla.), disagreed, saying, "What stops the man from going home and tooting his horn is fear"--fear of exposing his company to regulators and incurring fines or adverse publicity. Bill Gouveia, vice president, Atlantic Stainless Co. (North Attleboro, Mass.), countered by claiming that "hiding is doing you absolutely no good.” He said that the current misunderstandings and misperceptions of the scrap industry are the recyclers' fault, not the public's. ReMA members must accept responsibility for promoting their role and concerns, he asserted.
"Your worst fear is that they don't know you,” Gachman said, adding that trying to be invisible only harms the processor's credibility. Dan Coleman, plant engineer for Mansbach Metal Co. (Ashland, Ky.), agreed: "The worst fear of all is the fear of the unknown." He urged scrap processors and recyclers to invite legislators, regulators, and the public to see what they're doing. "The grassroots movement has to start at your plant," he said.
One way to improve the industry's image, Gachman suggested, is to "get down to the people level" and ask what you have done for your community. "Our actions speak louder than our words," he said.
One audience member claimed that not all scrap companies can afford a public relations campaign. Hunter asserted that public relations is inexpensive and does not have to require much time. Simply adding names to the Phoenix: Voice of the Scrap Recycling Industries mailing list and sending some copies of "The Scrap Map" to a local school is all that's needed to start, he said. Haught described public relations as an attempt to build friends and create good will. She advised scrap recyclers not to "tell" others what they want but to establish dialogues with groups and individuals.
Resources, Recycling, Regulations--A Bureau of Mines Perspective
BuMines Beyond Minerals
The U.S. Bureau of Mines has a much broader scope of duties than its name implies. V. Anthony Cammarota Jr., chief of the bureau's division of policy analysis, described BuMines's general mission as "the conservation of natural resources" and likened it to ReMA's recycling mission, noting that ReMA and the bureau have signed a memorandum of understanding promoting cooperation and the exchange of information. The bureau's interests go beyond minerals, said Cammarota, covering "the whole materials gamut." In fact, he said, the agency is now actively studying plastics, examining the impediments to their recycling and the effects federal regulations have on them.
Cammarota summarized several bureau studies of legislation and regulation related to recycling, including investigation of problems concerning regulation of lead-acid batteries and spent potliners from the aluminum reduction process. He said the bureau also regularly reviews laws, regulations, and treaties to evaluate their impact on trade in materials.
A summary of international regulation of trade and its impact on recycling was provided by Gerald W. Houck of the bureau's division of policy analysis. He described current rules affecting exporters, noting that some scrap is currently exempt from hazardous waste export rules.
Houck discussed the impending Basel Convention on the Control of Transboundary Movements of Hazardous and Other Wastes and its call for tighter controls on international shipments of secondary materials and wastes. The agreement is likely to restrict movement of more materials than current rules, including "household waste derivatives, " he said, but the status of scrap under the convention remains undetermined.
President Bush signed the convention last year, reported Houck, adding that it must now be ratified by the Senate and supported by implementing legislation before it can become effective. He said that a draft of the implementing legislation being prepared by the EPA would exempt scrap metals, but would cover more materials than are regulated in international trade as waste today. The draft also would give the EPA the power to make "interim rules" that could go into effect immediately without prior public notice or comment.
Jim F. Lemons Jr. of the bureau's branch of materials made a presentation on the bureau's studies of materials-use trends, noting a dramatic increase in use of organics--including asphalt, plastics, wax, and synthetic fibers--and the implications of using such a high volume of materials generally considered nonrenewable. He also discussed bureau examination of trends in materials displacing others, citing a study that showed plastics have replaced 7 percent of the steel, 11 percent of the copper, and 27 percent of the cast iron traditionally used in pipe.
Lemons said that legislation can be a major factor in determining materials use, especially when downstream costs such as disposal are brought into play.
Roger S. De Cesare of the bureau's division of environmental technology described the goals of his office: to reduce waste generation, clean up contamination, and develop systems to minimize environmental impacts of industry. He said the bureau deals not only with problems related to the 50 billion tons of mining wastes accumulated in the United States, but has also long studied other issues, including disposal of automobile shredder Ruff and stabilization of municipal incinerator waste.
An overview of the bureau's recycling technology efforts was provided by Pragna Bhakta, bureau program manager for recycling. The bureau has nine research centers spread around the country, whose recent projects include working with the U.S. Department of Defense to better use high-value defense scrap, development of eddy current technology to separate metallic and nonmetallic scrap, and development of techniques to lower the cost of recycling automobile catalytic converters. Bhakta said the bureau is committed to "helping the recycling industry overcome technical barriers" to recycling.
Plastic Committee Meeting
Plastic Industry Looks for Solutions
All plastics are recyclable, said Martin D. Drigotas, senior development programs manager for Du Pont Automotive Products (Wilmington, Del.), adding that although most of the necessary technology and equipment exists for recycling plastics, "the infrastructure does not."
Drigotas said that durable products are “more than likely the next battleground for recycling." He said that the plastic content of durable products is growing, and providing for the recycling of such durables, beginning with automobiles and shredder fluff, "is going to take a partnership" of many different interests.
Using automobiles as an example, Drigotas discussed some of the options for improving recyclability, such as "rationalizing"--limiting the number of different types of plastics used in automobiles--and consolidating several small parts into one larger one. Another improvement could be clearly identifying the plastics used in durables. Drigotas also suggested that improved durability of plastic parts, promoting part reuse, can offer a solution.
Hazards of Remelting Aluminum Scrap
Aluminum’s “Number-One” Problem
Melting contaminated aluminum scrap can have disastrous consequences. Water is a common problem for remelters, but a variety of other contaminants can cause explosions that throw molten metal up to 50 feet, kill employees, and severely damage property, according to two speakers at this safety committee-sponsored session.
The number and severity of explosions in aluminum remelt operations is increasing, reported Donald C. Pierce, manager of operations technology for Reynolds Metals Co. (Richmond, Va.). He cited increasing demand for aluminum, the resulting entrance into the industry of inexperienced remelters, and the fact that approximately a third of the new aluminum shipped today is made of secondary metal as reasons for the increase.
Explosions during melting are the "number one" concern of the aluminum industry, according to Seymour G. Epstein, technical director of the Aluminum Association Inc. (Washington, D.C.). Following a spate of serious accidents in the early 1980s, the association created a molten metal incident reporting program to collect information about accidents. Previous efforts had been haphazard, said Epstein; this program was designed to collect as consistent, complete information as possible. Each facility interested in the program had to commit to reporting any accident; about 190 plants in 20 countries have done so. Through 1990, Epstein reported, 775 reports were received.
The association categorizes the explosions as force I, II, or III--by increasing severity. Force I is called a "pop.” And results from water expanding rapidly as it turns to steam, throwing metal as far as 15 feet; little serious damage results, but injuries are possible. A force III explosion, on the other hand, is the result of a chemical reaction and is "severe," said Epstein. A force III explosion produces intense white light and results in serious damage and dispersal of aluminum up to 50 feet. A white oxide powder residue remains as testimony to the chemical reaction.
The association now receives reports of about three force III incidents, including several fatalities, and about 20 to 25 of the medium-strength force II explosions annually. Besides moisture which can be introduced through condensation, a soda can, or a pinched scrap tube that has collected rainwater--problem contaminants include aerosol cans, pressurized containers, toxics, and nitrates, according to Pierce.
Fertilizers present a common yet extreme problem, Epstein said. "Ammonium nitrate is an explosive in its own right. If you put it in a molten aluminum situation, there will be an explosion every time," he said. Scrap vessels that contained fertilizer or even scrap moved in trucks or train cars that had previously hauled fertilizer can be the source of these chemicals. Both speakers noted that there is no known way for such fertilizers to be adequately and economically removed from scrap.
Pierce said that untrained workers, mistagged bales of scrap, and incomplete inspection are major reasons for introduction of contamination. Other possible contributing factors are incomplete or unclear scrap purchase orders, carelessness, and sabotage, he said.
The Aluminum Association has formed a task force on scrap charging supply to attack such problems. Pierce said the group educates, encourages use of detailed purchase specifications, and recommends increased scrap tracking, inspection, and preparation by melters. The task force is also working to coordinate scrap rejection so contaminated loads are not given a market.
Rep. Glickman Reveals His Scrap Roots
Rep. Dan Glickman (D-Kan.), renown for his efforts to rewrite the law that enacted Superfund, opened the convention’s keynote breakfast with an explanation of his keen interest in Superfund: his father owns Glickman Inc., a scrap plant in Wichita, Kan., located on a Superfund site. Glickman said that the scrap business “is responsible for my outlook on life. … I knew about copper and aluminum before I learned about Congress.” His presentation also noted his support for the legislative need to distinguish scrap recyclers from waste disposal operations.
What It’s Like to Be a Convention Speaker
The laughter was uncontrollable at times during talk show host Larry King’s keynote breakfast talk. If we could recreate his humor about “what it’s like to be on this side of the podium,” we would. Unfortunately, if you weren’t there to hear it in person, you probably wouldn’t understand why the Rotary Club is still wondering about the future of the merchant marines and why if Boom Boom Giorno ever asks you to emcee an Italian boys club benefit, you should accept.•
More than 3,000 members of the scrap industry demonstrated their commitment to the future by attending the Institute of Scrap Recycling Industries’s (ReMA) (Washington, D.C.) annual convention and exposition in Las Vegas in mid-March.