How does the recycling of steel and aluminum industries work, and why is recycling their waste so important?
The recycling processes for steel and aluminum industries are critical because of the hazardous waste they produce. For aluminum, the waste is known as salt cake or salt slag, and for steel, it's steel dust. These materials are classified as hazardous by environmental regulators in regions such as Europe, the US, and more recently in China. The hazardous classification comes from the presence of heavy metals, which, if left untreated, can contaminate groundwater when exposed to rainwater. These industries are legally obligated to recycle their waste, and simply landfilling it is not a viable option.
For the past 30 years, our company has developed a technology to recycle these wastes. Our process takes materials like aluminum salt slag and steel dust and recovers valuable metals, primarily zinc, from them. This technology is essential because it prevents the environmental damage that could result from improper disposal. We recycle in compliance with regulations, ensuring a sustainable solution that reintroduces these valuable materials into the economy.
Can you explain the technology you’ve developed and how it supports a circular economy?
The core of our technology is a metallurgical process, invented three decades ago, that focuses on the recovery of metals from steel dust. Steel dust recycling is the most significant part of our business, and we are global leaders in this area, with operations in Europe, North America, and Asia. China, which now produces 50% of the world's steel, represents a key growth market for us, where we are expanding our operations.
The process involves using a 60-meter-long kiln, rotating continuously to extract zinc from steel dust. This zinc comes from steel scrap, much of which is galvanized, meaning it has a thin layer of zinc coating to prevent corrosion.
After the zinc is recovered, the remaining by-products are typically used in the construction industry. This not only reduces the need to mine new materials but also ensures that waste is transformed into resources that can be reused in the economy, thus promoting a circular economy model.
How does your company contribute to the fight against climate change and sustainability?
Our business model is one of the best examples of a circular economy in action. We take hazardous waste that would otherwise end up in landfills and turn it into valuable materials that can be reused indefinitely. By recycling over 1.2 million tons of material each year, we prevent the need for equivalent volumes of natural resource extraction, reducing the environmental footprint of industries.
The importance of this to the fight against climate change cannot be understated. By reintroducing recycled materials into the economy, we reduce both the need for new mining activities and the environmental degradation that accompanies them. Moreover, as we expand into more countries, the environmental benefits grow. Our future success is heavily tied to the adoption and enforcement of environmental regulations, particularly in emerging markets like India and China, where regulatory frameworks are still evolving.
What role does environmental regulation play in your industry, and how does it vary across regions?
Environmental regulation is a key driver of our business. In Europe, where our technology was developed, regulations are strict, and there is robust enforcement. Steel and aluminum waste must be recycled, and authorities carefully monitor every ton of waste generated. The US follows a similar model, though there are still gaps, particularly in the aluminum sector, where landfilling salt slag is still allowed in some states. However, progressive states like California and Texas are moving towards stricter rules, aligning with global sustainability efforts.
China represents a different case. While environmental regulations there are now comparable to Europe’s on paper, enforcement remains inconsistent. Many steel producers still find ways to avoid recycling, but this is improving over time as regulatory bodies become more diligent. India, on the other hand, is lagging in establishing the necessary regulatory framework, but we expect opportunities to arise as the country adopts more stringent environmental standards in the future.
How do you foresee growth for your company in the coming years, both in terms of new markets and financial performance?
The potential for growth in our industry is significant, particularly in emerging markets. In Europe, 45% of steel production comes from secondary sources, while in the US, this figure is 70%. China, however, produces 50% of the world’s steel, but less than 10% comes from secondary sources. This indicates a vast growth opportunity as the country transitions to a more circular economy model. Similarly, India, the second-largest steel producer, has yet to implement effective environmental regulations, which presents a future market for expansion.
From a financial standpoint, we are currently facing challenges related to our leverage ratio due to significant investments in the US and China. While the US market is taking longer than expected to yield returns, and China’s real estate crisis is impacting steel production, we remain confident. Our goal is to reduce our leverage ratio from the current 3.4 times to around 2.5 times over the next few years, which will align with market expectations and allow us to balance capital deployment with maintaining a strong financial position.
How does the global regulatory landscape shape the future of your operations?
The future of our business is intrinsically linked to the progression of environmental regulations worldwide. Our two primary growth drivers are environmental regulation and the shift from primary to secondary metal production. These forces only move in one direction: forward. No market has ever backtracked on recycling regulations once they’ve been established, and we expect that trend to continue as sustainability becomes a greater global priority.
In regions like India and the Middle East, where regulations are still underdeveloped, we see significant long-term potential. Our experience in China, where we set up operations in anticipation of regulatory changes, has shown us the importance of being proactive. As more countries adopt stricter regulations, we are well-positioned to expand and capitalize on these new opportunities, benefiting both the environment and our business.
