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THE PULSE
Newsletter of the Canadian Association of Recycling Industries
Volume 14, No. 7, July 2009

President's Message | An Industry Loss | CARI Convention Report
CARI 2009/10 Board and Executive | CARI Members | Fast Facts

PRESIDENT’S MESSAGE

It was great to see so many at our Convention at Taboo. Obviously, our numbers are down at this year’s convention, but many know from my messages in the monthly newsletter that I believe that those who take advantage of this association, and all that it has to offer, benefit the most.

Although the industry has had unprecedented challenges since our last Convention, it has certainly been my pleasure to represent you for the past year. I enjoyed meeting many of you at various functions and look forward to the opportunity to meet many more in the near future.

Despite the struggles we have all experienced in the first half of this year, I would now like to provide you with a brief overview report of the positive highlights we experienced in 2008. In fact, I can sum up 2008 in two words. It was the year of success and the year of change. I say success because CARI had another strong year. We grew membership and despite the additional expense of new staff and project costs, we were able to put additional funds aside to grow our surplus.

I want to focus on the tremendous changes that occurred in our sector just last year alone.

As we all know, the recycling world is an international industry. In Canada we are strongly tied to the U.S., with common ownership, joint ventures, and related issues such as metal theft. However, we all feel the impact of the changing commodity world, with the increased significance of nations such as India and China.

At the end of 2007 Steel Dynamics Inc. purchased Omnisource Corp. in the U.S. and Canada and American Iron and Metal announced that it was purchasing SNF Quebec Metals. The latter was completed early in 2008. These two substantial moves of consolidation, one within the recycling sector and one of upstream integration, were merely preambles to the significant industry changes that continued throughout 2008.

In February of 2008 Nucor Corp. acquired the David J Joseph Co.; another major event for our industry. In March, Nucor also acquired Metal Recycling Services and Galamba Metals Group and in April, negotiated an agreement with Advantage Metals Recycling. DJJ purchased American Compressed Steel and Victoria Recycling later that year in August.

Also, in February of 2008, Triple M Metal and Poscor Mill Services agreed to merge into a single company stating that this was consistent with the consolidation that had occurred in the global steel industry over the previous few years and its strategy to keep pace. Later in the summer, ArcelorMittal publicly announced during an international convention that its new strategy was to gain greater control of its raw materials such as iron ore, coke and scrap. This was shortly after its June acquisition of Bakermet Inc.

Tube City IMS Corp. acquired a Scunthorpe based British steel mill services provider, Hanson Resource Management Ltd., and its subsidiary, Hanson Support Services Ltd. Sims Group Ltd. acquired the assets of Weinert Recycling Co. Inc., a ferrous and nonferrous scrap metal recycler with operations in Middletown and Liberty, N.Y. In addition, Sims Group Ltd. formed a joint venture with Anaheim – SA Recycling LLC and purchased a 70-percent controlling stake in the Nevada-based scrap processor, Silver Dollar Recycling.

Gerdau Ameristeel Corp added the Guelph-based Metro Recycling into its operation, along with its 19 mini-mills; one joint venture and 22 scrap recycling facilities. The acquisition is reported to be in line with its strategy to retain a consistent supply of raw materials while providing opportunities for ferrous supply growth.

There were many smaller changes such as Grand River Recycling, which is the combination of Plaza Integrated Industries and Hagersville Recycling. In Winnipeg, General Scrap Partnership acquired Logan Iron and Metal.

This list of transactions is by no means complete, but highlights some of the major changes we have experienced. Similar to following our favorite baseball teams, we need a scorecard to keep track of the continual change of players in the scrap recycling industry.

Another major change in our industry occurred at the end of April last year. The London Metal Exchange launched two regional, physically delivered steel billet futures contracts. While there is some opposition to this move, we can only anticipate the final outcome.

Others changes come from the greater presence in our sector by the federal, provincial and local governments. Although this is not a new trend, the major change has been in the response to metal theft.

Markets for our materials are also another area of change. The demand for scrap from developing economies like China and India are already influencing trade patterns. A recent slowdown in domestic steel demand has prompted many scrap companies to ship shredded, HMS and even turnings oversees by containers, and in most cases, payment being made in advance of shipments. With this change comes the extra care that must be taken to ensure that trade barriers are not established which would negatively impact our ability to compete. Past events in China and more recently in India are examples. As we have all seen, companies need to pay greater attention to the contractual arrangements for overseas supplies. I’m sure we will continue to see ongoing changes.

There are the implications for our sector from the many stewardship programs that governments are requiring and supporting. Although most of these programs require manufacturers to pay in some manner for the end-of-life management of their products, we must be careful not to assume costs for these programs. Typically, there is no requirement to make better products through the “design for recycling “ that both CARI and ISRI have long supported. Some authorities, the so called stewards, try to create a collection program without any experience in this type of work. Additionally, we must be vigilant of unfair competition that can be created through these programs.

This is a brief overview of the environment that challenges our industry. You, our members, along with our Suppliers and Consumers, are facing constant change. I believe that CARI has done a good job in responding to these changes and continues to advocate on behalf of us all.

Last year CARI became a sponsoring partner in the mercury switch out program. Being part of the solution to take harmful mercury out of our environment is just one more effective way to promote the positive aspect of our business. We must also support our Consumers, many of whom are members and are mandated by federal government regulation to partially fund the program. Our participation is yet another example that we can use to correct the burden of misconception encompassing the recycling industry.

CARI also spent a great deal of effort on metal theft. There were many reactive initiatives, but I am most proud of our proactive activities that have educated government officials and local law enforcement agencies. We have demonstrated that we are part of the solution, not the problem. CARI has minimized the impact to our members, while improving our image on this issue.

Last year, our organization represented recyclers by making presentations to the Ontario Ministries of Environment, Small Businesses and Consumer Services, as well as the Board of Waste Diversion Ontario on the Ontario Waste Electrical and Electronic Equipment program. We also commented on other stewardship programs and currently CARI is a member on the Ontario Electronic Stewardship Service Provider Committee.

CARI has continued its work on industry safety and last year distributed a Human Resource Manual. This manual has been delivered to most members already this year, except for those of you in Quebec. Translation of such a document is a time consuming job that has just been completed. I feel these are most worthwhile concerns and the information we provide will prove most valuable, especially to our smaller members.

The bottom line is that 2008 was a very busy year and our industry saw major change. How fitting that our theme at this convention is that “Tomorrow is not Taboo”. Our future success relies on our ability to change. None of us can determine what exactly lies ahead, but we can take steps to be better able to respond. CARI provides a valuable tool in assisting our members with tools for future success. I know that our keynote speaker, Richard Worzel with be talking about how to prepare for what tomorrow brings and I look forward to his presentation.

Although I stand before you this morning, I am only one part of a total team effort that this year brought both accomplishments and disappointments. In all respects, we continue to strive to be your voice for our industry. I would like to take this opportunity to thank the members of the Board for volunteering their time and effort to help guide CARI. I would especially like to thank our dedicated staff, Donna, She Kei and Len, for their continued support and assistance. I also want to thank my wife Bethe for her encouragement and understanding during my current term as your President, as well as the senior management at FPT for giving me their endorsement in taking on this role.

Finally, I want to pay tribute to you, the members, for your continual support of our organization, and for allowing me to represent you during the last year.

Thank You.

Sheldon Jarcaig
CARI President

Visit www.agroinsuranceinc-crhb.ca for info.

AN INDUSTRY LOSS

It is with deep regret that CARI informs members of the sudden passing of Bernard Sacco on June 23, 2009.

Bernard, the founder of Sierra International Machinery LLC, died at age 87. He co-founded a business in 1947, which shifted to scrap in 1959, is now called Sierra Recycling & Demolition Inc. Ben was also a recipient of the lifetime achievement award at the last ISRI Conference in Las Vegas. He is survived by his wife, Eunice; sons John, Philip and Anthony; daughters Angela Aragon and Laura Sacco; and six grandchildren.

CARI and its members send deepest sympathy to Bernard’s family, friends and colleagues. Ben will be sadly missed.

About 150 delegates attended the Canadian Association of Recycling Industries’ (CARI’s) 68th annual convention in the beautiful Gravenhurst, Muskoka region of Ontario from June 25 to 27. The convention started off on a sunny day at the home golf course of Mike Weir and the nice weather continued through to the formal opening exhibitors’ reception.

At the Annual General Meeting members re-elected three directors. CARI President Sheldon Jarcaig gave his report that is printed above. Dennis Cebula, Secretary / Treasurer reported that CARI’s financial position in 2008 retained stable and resulted in an increased surplus. Len Shaw, Executive Director noted the continued growth in CARI membership and highlighted the significant issues it had faced in 2008.

The key note presentation was given by Richard Worzel, Canada’s leading futurist. His thought-provoking talk challenged everyone to examine the future and plan for it. He also suggested some of the tools to leverage those changes to revolutionize and prosper.

The “Running Your Business” forum focused on the industry’s image. Pat Cowman, President of MicroDotDNA Technology Canada gave a talk on crime prevention strategies with the aid of technologies to show how the industry is part of the solution. Krista Friesen from the Clean Air Foundation followed with a discussion on the importance of mercury switch removal and the positive image of recyclers who participate in the Switch Out program. Wrapping up the morning session, Bruce Savage from ISRI spoke on the experiences and tribulations ISRI had with its image campaign and to influence the public perception and develop a consistent industry image.

The afternoon consumer panel, moderated by John Harris, the Director of Raw Material with ArcelorMittal, started with Brian Shine, President of Manitoba Corporation, providing his insights into the copper sector. Bob Gallagher, General Manager of Indalloy, followed with a presentation on the aluminum sector and David Hodory, Director of Marketing and Communications for The David J. Joseph Company, shared his thoughts on the steel industry.

The convention was concluded with a wonderful banquet followed by an energetic performance by the Alexander Zonjic & friends. Members are reminded to mark their calendars now for the 69th convention that will be held at the Delta Hotel, in Charlottetown, PEI next June 10 to 12. Visit this site for more pictures.

CARI 2009/ 10 BOARD AND EXECUTIVE

With the re-election of three directors the CARI Board of Directors will remain the same for the next year. Past President - Randy Douglas (Gerdau Ameristeel); Maritimes - Norman Ross (John Ross & Sons); Quebec – Bertrand Van Dorpe (Rouville Station) and Lorne Kalisky (Vican Trading); Ontario – Steve Kerzner (Bakermet), Chris Cassell (Glenview Iron & Metal), George Zubick (John Zubick) and; Sheldon Jarcaig (Zalev Brothers); Prairies - Jack Lazareck (Logan Iron & Metal); Alberta – Robert Barnett (Rainbow Salvage & Demolition); B.C. – Harbinder Dhillon (Richmond Steel & Recycling) and; U.S.A. - Dennis Cebula (Keywell).

CARI’s Executive Committee will also remain the same: President, Sheldon Jarcaig; Vice President, Bertrand Van Dorpe; Secretary/Treasurer, Dennis Cebula; Past President, Randy Douglas; and Executive Director, Len Shaw.

CARI MEMBERS

CARI member, Sennebogen LLC’s President, Constantino Lannes announced that Midlantic Machinery has become the official distributor of Sennebogen purpose-built material handlers for Central Pennsylvania. Sennebogen sales and service are available in Midlantic’s Harrisburg, PA and Wilkes-Barre, PA locations.

Tube City IMS, LLC, a CARI member, has launched a new webpage that will provide detail information for suppliers. Through the new site, suppliers have access to review their orders, shipments, payments and obtain other important information. The website is a section of its existing site and it can be accessed at www.tubecityims.com.

FAST FACTS

• China’s Guangdong province has tightened inspection on scrap copper imports in response to underreported metal content and underpaid taxes. The clampdown, began in mid-May, has raised the value-added tax at ports. "Sizeable refined imports may be sustained for longer than expected as Guangdong’s clampdown helps keep scrap shipments at a low level," Qu Yi, an analyst for CBI China Co. said. She disputed the speculation that China had raised the tax on scrap metal imports. Minmetals Starfutures Co’s analyst Li Ye also disputed speculation that China may impose extra duties on scrap imports on top of the current 17% VAT charged on the metal content of the scrap.

• The Directorate General of Foreign Trade (DGFT), the Government of India issued Policy Circular No. 96, which clarified Public Notice No. 163. The DGFT stated that Customs will accept a copy of the contract that is redacted to protect confidential and proprietary information from the importer or exporter or a separate draft of the original contract excluding the confidential or proprietary information. Despite this, the contract must specify explicitly that "the consignment does not contain any type of arms, ammunitions, mines, shells, cartridges, radioactive contaminated, or any other explosive material in any form either used or otherwise".