Center Metals LLC (SCM) is investing $17 million in a new
aluminum casthouse that it plans to feed with scrap from its
existing operations as it also looks to increase internal
sourcing of billet.
The new remelt
operation, which will be adjacent to the Prince George,
Va.-based extruders existing presses, will have a
capacity of 75 million pounds per year, with one furnace
feeding two horizontal casting systems and a homogenizing
furnace at the end, company executives said.
"We expect to be
casting metal in April (2014). ... Everything is on schedule
and on time," SCM president and chief executive officer R.
Scott Kelley told AMM Aug. 28. "The big part
thats going to be helpful is were going to be able
to recycle 100 percent of our own scrap."
groundbreaking for the expansion earlier this weekwhich
also marked the companys 10th anniversary of its first
productionwas attended by nearly 600 people, including
Virginia Lt. Gov. Bill Bolling. But work on the project started
in earnest in April, Kelley said, noting that while equipment
has yet to be delivered the roof is already on the building
that will house the new remelt system.
SCM already has two
extrusion pressesnicknamed "Elvis" and "The
Boss"with a combined annual capacity of 100 million
pounds, Kelley said. The casthouse expansionwhose two
horizontal casting lines have been dubbed "Mick" and
"Keith"wont target new business but will instead
make SCM more efficient, Kelley said.
The company will
continue to focus on its longtime business model of supplying
service centers with a range of extruded products, including
custom and standard shapes, pipe and tube, and rod and bar for
machining applications, Kelley said. The difference:
"Well have more control over our own billet," he
SCM extruded its first
product from "Elvis" in 2003, and doubled the size of the plant
and tripled its capacity in 2006 with the addition of "The
Boss," Kelley said. The company had planned additional growth
until the 2008 recession saw those plans called off, he
"Now that the company
is doing very wellwere at capacity in terms of our
own presseswe felt like it was a good time, especially
with a tight billet market," Kelley said. SCM has enough space
to consider future expansion, although the company is focusing
on the new casthouse for now, he said.
SCM decided to go with
a horizontal casting process instead of a more conventional
vertical process for cost and flexibility reasons, company vice
president of operations Chip Dollins told AMM. "We
looked at vertical casting as an option. But the economies of
scaledigging a deep pitmeans you need a plant with
a capacity of somewhere close to 200 million pounds annually to
make it viable." With horizontal casting, SCM can avoid digging
a deep pit while keeping the option of expanding by adding
another casting line, he said.
generate 75 million pounds of scrap per year, so it will
continue to source from the local marketalbeit at reduced
volumes, Dollins said. Also facing changes is SCMs
trucking subsidiary, which in the past picked up scrap and
hauled it to a toll processor that made billet for the company.
The trucking subsidiary will continue to haul scrap but will
focus increasingly on delivering finished products to
customers, Dollins said. "Were not going to send them to
Los Angeles, but Chicago is a possibility."
If and when the
company chooses to expand is largely a function of conversion
costs, Dollins said. "If our assumptions are correct ... and
the system saves us the money that we think it will, we would
choose to add another casting line in the future to produce
more of our own billet," he said, predicting that the expansion
should pay for itself in about three years.
For now, SCM will
simply scale back its billet buying, Dollins said. "Of course,
if purchased billet costs continue to go up we would seriously
look at adding another line to be more self-sufficient."