PITTSBURGH MetalX LLC is said to be close to finalizing a deal to buy an auto shredder facility in Birmingham, Ala., owned by Sims Metal Management Ltd.
None of the parties involved would comment, but the industry is abuzz that Sims is divesting the shredder in the very near future and MetalX reportedly has locked up a deal to sell shredded scrap from the plant to Birmingham-based American Cast Iron Pipe Co. (Acipco).
Acipco, which runs a shredder at its pipe manufacturing facility, would eventually mothball its equipment and secure its melting needs from Waterloo, Ind.-based MetalX,
Acipco would become less vertically integrated, sources said, noting that the company had no interest in buying the shredder and moving it to its melting facility. And MetalX wont relocate the shredder to the Acipco facility, which could save $5 per gross ton in transportation costs, because Acipco doesnt want an outside party operating on its property, sources said.
Jefferson Iron & Metal Brokerage Inc. reportedly would market the scrap at all southeastern yards, sources told AMM.
MetalX was launched by Rifkin brothers Danny, Rick and Marty less than one week after the expiration of a five-year no-compete agreement when they sold OmniSource Corp. to Steel Dynamics Inc., both based in Fort Wayne, Ind.
Acipco, Jefferson Iron & Metal and Rifkin-owned private equity firm North River Capital LLC all hold a stake in ARC Alabama LLC, a recycling entity that can process auto shredder residue.
The MetalX auto shredder in Waterloo is running at capacity and the company has said it is ready to expand (amm.com, March 28).
In an exclusive interview in November, MetalX president and chief executive officer Danny Rifkin said the company expected to complete two acquisitions in the first half of 2013 (amm.com, Nov. 1).
There have been rumors that other Sims assets could be picked up in the deal, but this couldnt be substantiated.
Sims has expressed an interest in focusing on coastal areas, which have the increased likelihood of a strong return on its investments. It is building a new shredder on the New England coast and is growing its feeder yard network in the Gulf Coast.
"These actions are part of our clear strategy to direct capital to the highest-returning assets, with an emphasis towards water-based facilities on brown water and blue water," Daniel W. Dienst, Sims chief executive officer, said in a recent conference call, noting that facilities not near exporting avenues tend to produce lower returns.