NEW YORK Novelis Inc. is looking to set up closed-loop scrap supply chains with its North American automotive aluminum customers to meet an anticipated increase in automotive sheet demand in 2013.
Derek Prichett, vice president of global recycling at the Atlanta-based company, told AMM that the company sees "a similar model to the way that the can sheet business works."
"The story in the North American market is the rapid growth in auto demand. Thats obviously going to drive increased sales of flat-rolled sheet, but it will also drive the generation of more scrap," he said. "Were looking at setting up closed loops with auto customers to obtain their scrap for converting it back to automotive sheet again."
The move comes as Novelis continues its pursuit of 50 percent recycled content in its products by 2015 and 80 percent recycled content by 2020. The company also has a goal of increasing its use of non-can scrap from 1 million tons in 2011 to 2 million tons annually by 2015 and 4 million tons by 2020 (amm.com. Nov. 9, 2011).
Prichett said the company expects to announce another increase in its recycled content use in March, having surpassed the 40-percent mark in August.
Scrap market sources contacted regularly by AMM claim that Novelis now frequently leads the market in the pursuit of aluminum scrap, with Novelis president and chief executive officer Phil Martens acknowledging in August that the company has been "very aggressive" in its approach (amm.com, Aug. 14).
Prichett said that Novelis diversification into using more non-can scrap will help keep purchasing costs at a manageable level. "Were going to be an active buyer in the scrap market for all different types of scrap," he said. "Our objective is to pay at the market rate, not above."
Prichett said the company will have to add scrap processing capacity in all of the regions in which it operates, including North America, to reach its goal of 80 percent recycled content by 2020. "Weve announced major expansions on three major continents, and were now actively looking at options in North America," he said. "We were buying 1 million tons of aluminum scrap worldwide, and were looking to get to 4 million tons by 2020. We dont have that much idle capacity sitting in any of our regions right now."
He added that Novelis doesnt expect any "major dislocations in prices" to occur in the coming year. "We expect to be able to buy everything that we need and more."