NEW YORK A
major East Coast scrap recycling company and exporter, OneSteel
Recycling Inc., has been put up for sale by its parent company,
Australia-based steel and iron ore producer said in a
pre-earnings statement released July 4 that it would offer its
U.S. recycling business for sale. Arrium also will look to sell
its merchandising businesses that were previously part of its
steel distribution segment, as well as its Australian tube
An Arrium spokesman
said that only OneSteel Recyclings U.S. operations were
for sale, and not the global entity that operates from 39
locations in the United States, Australia, China, India, New
Zealand and the United Kingdom.
In the United States,
OneSteel owns and operates five facilities in Florida, five in
Maine and one in Virginia. It is unclear if the companys
facilities in Canada will be included in the sale.
"It is the U.S.
recycling operation that we are holding separately for sale. We
are progressing this process and will provide an update at the
time of our August results," the spokesman told
The company expects
all the sales to result in impairment and restructuring charges
of nearly Australian $360 million ($326.3 million).
"We have a priority to
reduce the companys overall level of debt. Todays
announcement reflects initiatives in our steel and recycling
businesses, with our focus on improving earnings and cash
generation," Arrium managing director and chief executive
officer Andrew Roberts said.
The company had
announced in June that it would focus on cash generation
through improved earnings from cost reductions and driving down
working capital, as well as divesting "non-integrated" steel
businesses and properties. The company also combined its steel
manufacturing and distribution businesses into a single steel
Arrium said it also is
undertaking additional rationalization work, predominantly in
its recycling business, resulting in impairment and
restructuring charges of around A$50 million ($45.3 million),
including about A$30 million ($27.2 million) of recycling
Market participants in
the United States said the news came as no surprise, with
several companies rumored to be interested in acquiring
OneSteels U.S. assets, although none would confirm the
talk of OneSteel USA being up for sale for some time now. I
think thats why Tommy Quirke and Steve Ryan left the
company in May. They probably knew what was coming," one source
In May, the company
confirmed that Quirke had resigned as president of OneSteel
Recycling effective May 14 (
amm.com, May 14). Ryan, a senior executive in the
company, reportedly also resigned on the same day. The two are
rumored to be mulling launching their own enterprise.
According to a second
source, the valuation of OneSteel Recyclings U.S.
operation will be poor. "With the Florida market so saturated
with shredders and the new shredder that (Topsham, Maine-based)
Grimmel (Industries LLC) has installed, I wouldnt say it
is worth a lot. The land and the berth are worth something,
though," he said.