Parlez-Vous Scrap?

Look beyond France’s façade—beyond its wine, fashion, and gourmet food—and you’ll find one of the largest scrap recycling and consuming industries in Europe.

By Robert L. Reid

Robert L. Reid is managing editor of Scrap.

Charles de Gaulle once said of his native France: “How can you be expected to govern a country that has 246 kinds of cheese?”

With slightly less Gallic exuberance, France has only three different terms for the word “scrap”: ferrailles, déchets, and mitraille, according to a pamphlet from the Dutch publication Magazine Recycling Benelux.

It is ferrailles, though, that the French use most commonly for scrap, at least in the sense of scrap iron and steel. But the multiple listings are at least symbolic of France and its people, which seem to possess a number of diverse and sometimes confusing characteristics when viewed from outside l’Hexagon (a French term for France, based on the roughly geometric shape of the country’s borders).

For instance, on this side of the Atlantic it’s mind-boggling to imagine a country where people take to the streets to demand subsidized theater tickets, where the government raids businesses that are working their managers too hard, and where the solution to high unemployment (more than 12 percent overall and 24 percent for people under 26) is to cut the workweek to 35 hours in hopes that employers will hire more employees to get the same jobs done.

Yet these facts show only certain facets of modern France.

At the same time, France also has the fourth-largest economy in the world and is the fourth-largest exporter—primarily of luxury goods, wines and other agricultural products, automobiles, and aerospace technology. France’s 58 million citizens have one of the highest per capita incomes in Europe at $20,500 compared with Germany’s $21,100, according to 1996 figures. And it’s quite possible that a French banker will serve as the first president of the European Central Bank, which will oversee Europe’s move toward a single currency starting next year. (Germany, however, is supporting a Dutch candidate and the issue is temporarily stalemated.)

These dichotomies create a country that, in the words of Business Week, is split in two between a “lean, profitable, and competitive” private sector—incorporating its scrap processing and consuming industries—and a “lumbering, inefficient public sector.”

Scrap Savoir-Faire

In the world of scrap processing and consuming, France can seem equally powerful and perplexing. Ask international scrap executives if there’s anything unique about the French scrap industry and their answers range from a denial of any substantial difference—“They speak better French than we do”—to variations on an oft-repeated theme: the French are “closed,” “self-contained,” and “stick to themselves.”

Overall, an estimated 2,700 firms make up France’s scrap industry, which has annual revenue in excess of $6 billion, with nearly a fourth coming from exports, according to information from the Bureau of International Recycling (Brussels). The French scrap industry employs some 26,000 people and recovers more than 22 million mt of recyclable material annually. Secondary materials reportedly account for more than a third of France’s overall raw material needs.

Studies by the London office of international business consulting firm Frost & Sullivan indicate that France is the second-largest producer of recycled metals in Europe, with roughly 15 percent of the market compared with Germany’s 32 percent—figures that have held steady for most of this decade. Growing demand for scrap metal in France should increase total shipments from 12.8 million mt in 1995 to 14.7 million mt by 2000, the firm predicts.

Ferrous scrap thoroughly dominates those shipments, with Frost & Sullivan’s 1995 figures giving ferrous scrap a whopping 96 percent of the French market, followed by nonferrous metals such as aluminum (2.1 percent), lead (1.4 percent), and zinc, copper, gold, and silver (all less than 0.5 percent).

On the scrap paper side, France accounted for roughly 14 percent of Europe’s total recycled fiber market in 1995, trailing both Germany and the United Kingdom, which have 28 and 16 percent of the market, respectively, Frost & Sullivan indicates. French scrap paper shipments should increase from 4.4 million mt in 1995 to 5.1 million mt by 2000, according to the company. Packaging dominates the French paper market at 64 percent of total shipments in 1995, followed by newsprint (25 percent), printing and writing paper (7 percent), and tissue paper (less than 4 percent).

Strength in Steel

So much for the overview. Here’s a more commodity-focused look at France’s scrap industry.

When it comes to steel, France is the fourth-largest European producer—after Germany, Italy, and Great Britain—turning out 19.6 million mt in 1997, according to Recyclage Récupération, a Paris-based recycling magazine. France’s steel industry has shrunk considerably in the past decades, with as much as three-fourths of French steelworkers losing their jobs. As a result, a single firm—Paris-based Usinor Sacilor SA—dominates the French steel industry, controlling 90 percent of the country’s steel production, and is itself the fourth-largest steel company in the world.

As in the United States, France has been increasingly relying on scrap-fed electric-arc furnaces to make its steel. The proportion of French steel produced in electric-arc furnaces has grown from roughly 28 percent in 1990 to 39 percent in 1996, sources estimate.

And France is determined to do more with scrap-fed steelmaking: The government is putting up more than $3 million to help Usinor develop the “steelworks of the future,” a $14-million project designed to make the maximum use of scrap metal, energy conservation, and environmental protection in steelmaking.

Not surprisingly, scrap purchases by the French steel industry have increased from 3.2 million mt in 1980 to more than 6 million mt by 1995, according to figures from SNF, the French trade association for ferrous processors. Other sources report that France consumed 7.7 million mt of scrap steel in 1997.

To meet this growing demand, French producers have had to import more and more ferrous scrap, with the amounts fluctuating from year to year, but generally rising. For instance, the 456,000 mt of ferrous scrap that entered France in 1980 grew to 1.6 million mt by 1995, SNF says. Figures from 1997 indicate an even stronger year for imported ferrous scrap—more than 2.3 million mt in all, including 1.3 million mt from Germany, 412,000 mt from the Benelux countries (Belgium, Netherlands, and Luxembourg), and nearly 238,000 mt from the United Kingdom. Its imports of U.S. scrap are often negligible.

At the same time, France exports about 3 million to 4 million mt of ferrous scrap a year—a rate that’s held fairly steady for some time, according to SNF’s figures. The bulk of France’s scrap exports head to two countries—Italy and Spain, its neighbors to the southeast and southwest. But over the years, the proportions of those exports have almost completely reversed. In 1980, for instance, France shipped nearly 2.6 million mt of ferrous scrap to Italy and about 392,000 mt to Spain. By 1995, its exports to Italy had been cut by more than half to just over 1 million mt a year while its shipments to Spain had more than tripled, reaching a then-record 1.39 million mt. And Recyclage Récupération put the numbers for 1997 at approximately 730,000 mt for Italy and more than 1.4 million mt for Spain.

In contrast, France shipped only 34,000 mt of ferrous scrap to the United States last year and less than 6,000 mt to South Korea.

Nonferrous Potential

Nonferrous scrap—representing only a fraction of the total French scrap metal market—can seem like a croissant compared with the long, crusty loaf of ferrous scrap the country consumes each year. Even aluminum, the leading nonferrous commodity in France, just doesn’t command the demand it does in other countries. For instance, the average French consumer uses only 12 aluminum beverage cans a year compared with 70 for the average European and 400 for the average American. But that average could be heading upward given that France’s consumption of aluminum cans is increasing about 20 percent a year, Recyclage Récupération reports.

Overall, French industry consumed slightly more than 1 million mt of nonferrous scrap in 1995, according to SNRMF, the French nonferrous trade association. Aluminum led the way at 419,000 mt, followed by lead and lead alloys (265,000 mt), copper (223,000 mt), and zinc (135,000 mt). Overall, recycled nonferrous metals account for 68 percent of France’s lead consumption, 34 percent of aluminum, 27 percent of copper, and 24 percent of zinc.

To meet its nonferrous needs, France imported more than 425,000 mt of nonferrous scrap in 1995 and exported 368,000 mt—a roughly 9-percent increase in imports and nearly 7-percent drop in exports from the previous year, SNRMF indicates. By commodity, France imported roughly 169,000 mt of aluminum scrap and exported 156,000 mt. It imported more than 93,000 mt of copper scrap, while exporting 154,000 mt. Roughly 3,000 mt of nickel and nickel alloys were imported and just slightly more—3,700 mt—were exported. The figures were more disparate for lead and lead alloy scrap, with France importing 99,000 mt and exporting just 8,000 mt. Finally, France’s imports of zinc scrap exceeded 61,000 mt while its imports reached slightly more than 45,000 mt.

Unfortunately, the origins and destinations of France’s nonferrous scrap trade aren’t well-documented, though Spain and Italy are reportedly the largest buyers. Meanwhile on the import side, African nations such as Morocco, Tunisia, and the Ivory Coast—all with historic ties to France—are the main suppliers of France’s nonferrous imports.

Processing Paper

France—the nation that coined the paper-intensive word “bureaucracy”—consumed more than 4 million mt of scrap paper in 1996, with an overall recovery rate of more than 41.6 percent, according to REVIPAP, an organization of French paper recyclers. Overall, France ranks ninth among European nations in paper recovery rates, trailing far behind such heavy-duty recyclers as Germany and Austria, which both had recovery rates of more than 70 percent.

By grade, for 1995, France recovered 77 percent of OCC, 35 percent of ONP and OMG, 21 percent of office and printing paper, and 17 percent of mixed-grade paper, notes an executive with Jaakko Poyry Consulting (Helsinki). 

In 1996, REVIPAP reports, France ranked sixth in the world for recovered paper imports—with 1.08 million mt—and fourth in exports, shipping 748,000 mt. France imported mostly OCC, Jaakko Poyry indicates, with Germany supplying roughly half the total. About 400,000 mt of France’s recovered paper exports went to Spain—much of it mixed-grade—with about 130,00 mt of OCC going to Italy and another 100,000 mt of various grades to Germany.

Finally, while most European paper mills handle both virgin and recovered fiber, France is currently experimenting with the first major mill dedicated to deinked pulp, an international consultant notes. The $195-million Greenfield Paper project, located near Paris, is expected to produce 150,000 mt a year.

A Challenging Future

As for what the future holds for France’s scrap processing and consuming industries, much of the answer lies in the health of its economy, which can be seen as both stronger and weaker than it seems. Which way it ultimately goes will depend on many factors, including the business climate in the rest of Europe.

Moreover, France’s self-image as a hexagon—a six-sided shape with sharp points along its straight edges—risks making the country a bad fit with the encircling demands of the global economy. Observers note that French employees are highly suspicious of globalization and expressed their displeasure last year by voting in a Socialist government at the same time that many former Socialist countries in Europe were adapting themselves to free-market capitalism. Ironically, though, France’s Socialists have since been forced to hold down their country’s budget deficit to meet the strict requirements of the coming European monetary union.

But even there the dichotomies of modern France can’t be avoided. If monetary union creates a strong currency in the euro, analysts note, it could have disastrous effects on price-sensitive French exports such as scrap metal and paper, not to mention its 246 varieties of cheese. 

CFF—France's Scrap Giant

It’s impossible to talk about the French scrap recycling industry without mentioning one company—Paris-based Compagnie Francaise des Ferrailles (CFF).

In addition to being the largest scrap firm in France—with 35 percent of the French ferrous scrap market and 40 percent of its nonferrous—CFF claims to be one of the top-seven scrap conglomerates in the world.

That’s believable, given its 2,000 employees, processing output of 4 million mt of ferrous and 350,000 mt of nonferrous scrap a year, and annual revenue of $4.6 billion francs—roughly $767 million. The firm’s processing facilities account for 70 percent of its revenue, with its brokerage operations making up the remainder. By commodity, ferrous scrap accounts for 60 percent and nonferrous scrap brings in 40 percent of its revenue.

CFF was founded in 1956, the result of a merger of five French scrap recycling companies and, later, a sixth. After beginning as a privately held corporation, CFF went public in 1963 and is currently traded on the Paris Bourse—France’s stock market.

From its first processing plant in Toulouse, the firm has grown to encompass 100 facilities in France and 15 abroad, covering 10 European countries, the United States, Mexico, and China. CFF’s foreign operations account for about 15 percent of its annual revenue, or around $115 million. Of these plants, CFF acquired existing facilities in two-thirds of the cases and established the remaining third as new CFF ventures.

CFF’s processing plants operate 35 shredders worldwide. Thanks to new agreements with European carmakers, the company expects to double the number of cars it processes in fiscal 1997-1998.

Related to its shredders, CFF has been active since 1980 in developing ways to reduce, reuse, or recycle the 350,000 mt of nonmetallic residue generated by its shredding operations each year. Its goals are “to add value to this type of refuse and limit its impact on landfills.” One way of adding value has been to use the material as a fuel in cement kilns. In 1997, in fact, CFF—through its affiliate Valerco, a 50/50 joint venture with cement maker Vicat—used 18,000 mt of residue as such fuel, and it plans to use 25,000 mt in 1998.

In addition to its scrap processing facilities, CFF operates five car dismantling and retail parts operations in France. It also has three scrap-consuming plants—Refinal, an aluminum smelter in Lille; Aprometal, a copper smelter in Poissy; and Purfer, a zinc refinery in Lyon. Refinal recently installed a new 1,300-mt-a-month furnace, which has boosted CFF’s global secondary aluminum ingot production to 4,000 mt a month.

CFF has also teamed with Hoogovens Scrap Processing BV (IJmuiden, Netherlands) to dezinc galvanized steel scrap at a plant near Valenciennes. This venture, named Compagnie Europeene de Dezingage, has a current processing capacity of 4,000 mt a month.

In the past two years, CFF has undergone many changes. In October 1996, the firm ushered in a new, young president—44-year-old Daniel Derichebourge, who succeeded Jacques Tapiau. Since then, Derichebourge has cut CFF’s expenses, reduced its work force by 150 employees, and made several acquisitions. These have included buying George & Cie SA (Brussels) and acquiring a 50-percent interest in Brufer SA (Brussels)—both joint ventures with Almetal Beheer NV (Ghent, Belgium)—as well as completing the purchase of a shredding operation in Poitiers, France. And in January, CFF opened what it says is the first shredding operation in Mexico City in a joint venture with Tamsa (Mexico City).