May/June 2008

ISRI 2008 Convention & Exposition Highlights

ISRI pulled out all the stops—and blew away all the records—at its 20th-anniversary convention, taking the industry and its members into heady, uncharted territory.

Wow. That's the best way to sum up ISRI's 2008 convention and exposition, which rewrote the history books in virtually every way. For starters, the event—held in Las Vegas in April—set a new record of 5,762 attendees, obliterating the previous record of 4,285 people set in 2006. It also was the most international ISRI convention, with attendees from the United States and 50 other countries—from Algeria to Vietnam. This year's exposition showcased the greatest number of exhibitors (209), and they occupied the greatest number of booths (287) as well as the largest equipment-display space ever, more than 44,000 square feet. In sum, the 2008 ISRI convention took a quantum leap forward, carrying the association's signature event—and its attendees—to a whole new level.

What made this year's convention so successful? Strong scrap markets were a big reason. The venue—the Mandalay Bay Resort & Casino in Las Vegas—was another draw. ISRI also celebrated its 20th anniversary at the show, enticing old-timers and newcomers alike to join the party. Then there was the one-of-a-kind ISRI exposition—still the largest, most exciting scrap recycling exhibition in the world. Last but not least, this year's gathering offered an alluring roster of workshops, commodity spotlights, general sessions, just-for-fun programs, networking events, and social functions. Together, these factors created the perfect conditions to propel the ISRI convention off the charts.

In addition to its historic numbers, this year's convention was notable for marking the changing of the ISRI guard, with the election of new national officers. Frank Cozzi of Cozzi Enterprises (Burr Ridge, Ill.) wrapped up his two-year term as the association's chair, passing the reins to new ISRI Chair George Adams of SA Recycling (Anaheim, Calif.). Joining Adams in the national officer ranks are Chair-Elect John Sacco of Sierra Recycling & Demolition (Bakersfield, Calif.), Vice Chair Jerry Simms of Atlas Metal & Iron Corp. (Denver), and Secretary/Treasurer Doug Kramer of Kramer Metals (Los Angeles).

As ISRI looked to the future by electing its new leaders, this year's convention marked and honored the association's first 20 years. Some 25 years ago, a few visionary industry leaders got the "crazy idea" to merge two "well-established, well-loved trade associations"—the Institute of Scrap Iron and Steel and the National Association of Recycling Industries, said Frank Cozzi at the convention's opening breakfast. That idea became reality in 1987, when ISIS and NARI merged to form ISRI. The initial challenge was to fit the two great organizations together "into an even stronger association—with one voice and one shared goal," Cozzi said. Then ISRI set to work protecting and advancing the scrap recycling industry, winning critical battles on many issues—such as Superfund and export controls—and aiding members through safety training, trade missions, business insurance, stormwater compliance, operating standards, an industry image initiative, and more.

The association is not resting on its laurels, however—it is ready to face current and future challenges, including growing concerns about climate change and the constantly changing global markets, Cozzi noted. "We must understand that the next 20 years can either simply happen to us, or these years can be shaped by us," he said. "How willing we are to get involved in our communities and in our government relations will determine the answer to that question."

New ISRI Chair George Adams takes office with ISRI's rich legacy behind him and its promising future ahead. While maintaining the core values and continuing the priority projects of his predecessor—such as safety and the industry's image campaign, to name two—Adams says he has plans to make ISRI even better. How? By expanding the association's membership and increasing the level of member participation. By bringing more openness to the association's processes and more efficiency to its governance. By expanding ISRI's education and training opportunities. By building the association's stature among elected leaders at all government levels. "Working together, we can build on our amazing success," Adams said at the convention's keynote luncheon. "Working together, we will take ISRI and our industry to the next level—better and stronger than ever before."

That last phrase—"better and stronger than ever before"—certainly sums up the 2008 ISRI convention and exposition. Here are some visual and editorial highlights to help you recollect the rich content and great times of the biggest ISRI show ever. 

Commodities in the Spotlight
Ferrous Market Faring Well. The booming steel market appears "quite sustainable," said Aldo Mazzaferro of Goldman Sachs (New York) at the ferrous spotlight. He pointed to supply tightness, as the flow of steel from some traditional global suppliers has declined, with India becoming a net importer and China's net exports dropping 50 percent since the beginning of 2007 due to healthy domestic demand and higher taxes on exported steel. That's coupled with "very strong" demand in Brazil, Russia, India, China, and other nations, he said.

China will affect the markets in another way in the short term, said John Harris of ArcelorMittal (Innisfil, Ontario). The upcoming Olympic Games in Beijing will likely boost the international steel trade because the Chinese government will close some mills to improve the city's air quality. By trimming its domestic production, China "may even be importing" for a period, he said. Mazzaferro added that China's demand for steel is currently outpacing its growth in steel production. "That, to me, is the major factor to watch because that takes away the option for China to become a big net exporter again," he said.

Scrap prices, meanwhile, could climb even higher on the back of already-strong global demand that will only intensify as electric-arc furnace capacity grows, Mazzaferro said. Russia will add 25 million to 30 million mt of annual EAF capacity in the next five years and is "showing signs of moving towards a net importer position" for scrap, he said. India also plans to boost its EAF capacity from its current 65 million mt to 200 million mt by 2020, Mazzaferro reported.

Rising scrap demand and limited supplies have made ferrous scrap "the prettiest girl at the dance," and that trend is likely to continue, said Eric Glover of Canaccord Adams (San Francisco), examining the ferrous market at the workshop on industry consolidation. With EAFs expected to generate 37 percent—or about 500 million tons—of global steel production by 2010, steelmakers will require nearly 100 million additional tons of ferrous scrap, he said.

The average price for No. 1 HMS has increased 240 percent since 2000, Glover said, asserting that the "days of cheap scrap are long gone." He projected a new "higher pricing floor of $300 a gross ton" and noted that though "volatility will continue, prices will continue to march higher."

Looking at the global demand for scrap, Glover said that U.S. ferrous exports have tripled since 1999. He predicted that the country will match its record 2007 export total of 16 million tons in 2008. "Scrap is leaving [the United States] at a faster rate because it's a good buy anywhere in the world," Harris said.

With global demand for scrap rising, U.S. steelmakers "are increasingly concerned about losing scrap to overseas buyers," Glover said. As a result, "steel mills will acquire more scrapyards" to secure their access to more scrap. Mills that do integrate backward, he cautioned, "must resist micromanaging captive scrap suppliers."

That's not possible, said Albert Cozzi of Cozzi Consulting Group (Burr Ridge, Ill.) at a workshop on industry consolidation. "I don't believe the steel industry is going to allow scrap companies to run [autonomously]. They're going to get their hands involved in the operations of the businesses, just like they did before," he said, referring to previously unsuccessful efforts by steelmakers to operate scrap facilities.

In Cozzi's view, steel industry integration into the scrap business doesn't make sense because "the steel mill approach to business is from a different mind-set." Scrap dealers, he explained, strive to sell their scrap for the highest possible price, but steel mills want to buy scrap at the lowest possible price. "If you want to buy it," he said, "you've got to pay the price. I don't believe the steel industry is going to be able to take its philosophy to buy scrap cheaper and transport that into a winning entity." Cozzi also maintained that "a lot of the deals are being pushed by analysts who are telling steel mills that they have to own their own source of raw material."

Scott Newell of The Shredder Co. (Canutillo, Texas) countered that "the scrap industry and the steelmaking industry are really just one industry" and called for an end to the "antagonistic relationship" between the two businesses. The free market will be "relentless" in forcing both industries to be more efficient, and integration may be part of that strategy, he said. Steelmakers need to learn how to make more steel at lower cost and use scrap better "so there's more value added with every ton," Newell said. Scrap processors need to learn how to collect, process, and deliver their scrap more efficiently and reduce their operating costs while adding value to their prepared scrap, he added.

Cautious Optimism for Aluminum. [MINISUB] Volatility was the buzzword at the convention's aluminum spotlight. After peaking in March 2007, the metal's value fell through the second half of the year, in part due to abundant supply. The picture began to change in the fourth quarter, though, with tighter alumina supply, strikes, and energy costs that continued to escalate, said panelist Edgardo Gelsomino of Metal Bulletin Research (London). Add to that early 2008's severe winter storms in China and power problems in South Africa, he said, and prices swung upward again in the first quarter. The fundamentals are "strong enough to push the market up, and supply concerns help," he said, but he expects supply to stabilize in the coming months.

Supply and demand are no longer the only factors influencing price, though, Gelsomino said. Higher levels of investment fund activity are increasing volatility. "Aluminum has been swinging according to the mood of the market," he said. Recent price movements highlight "how sensitive the market is to surprise disruptions," even when there's no evidence those events actually interrupted supply. Gelsomino expects the volatility to continue, but in the end he believes 2008 prices will be up by an average of $100 to $120 a mt, to $2,780.

Denny Luma of Superior Aluminum Alloys (New Haven, Ind.) agreed that speculation is currently driving the aluminum price, but Norberto Vidaña of automotive cylinder manufacturer Nemak (Monterrey, Mexico) pointed to energy costs, which he said are 30 percent of primary aluminum costs. Gelsomino noted that both play a role in price, but on different time horizons: Fund activity is driving up prices in the second quarter of 2008, he said, but "extend the time frame, and the power issue is a big factor." He predicted that slowing economic growth in North America will curb energy costs, however.

In the long term, Gelsomino said, demand will drive up prices as well, even though "North America and Europe are poor markets now." For example, Vidaña noted, in the automotive sector, a growing consumer of aluminum, vehicle sales decreased by 1 million in March 2008 compared with March 2007. Despite this weakness, Gelsomino said, "aluminum consumption will grow 6 percent a year for the next 10 years," and Luma predicted automotive aluminum consumption alone will grow 6 percent a year until 2012, as people look for lighter, more fuel-efficient vehicles.

To cope with aluminum's volatility, Luma recommended that companies actively manage their risk. "If you don't have a written risk management policy and review it every few months, you might miss an opportunity," he said. Vidaña agreed that volatility is currently a bigger problem than price, and both men expect continued volatility for the foreseeable future.

Copper Poised to Remain High. The robust climate in the copper market will continue, "particularly in the next six months, and copper prices will remain exceptionally high," said Patricia Mohr of Scotiabank (Toronto) at the copper spotlight.

In her view, copper prices are likely to average "a little higher" than last year, with the LME cash price on track to average at least $3.50 a pound, compared with $3.23 in 2007 and $3.05 in 2006, Mohr said.

This year started off with "exceptionally high" copper prices, so Mohr said she was "extremely surprised" when LME copper reached a record $4.06 in early March. Given copper's continued strength in April, "I wouldn't be at all surprised to see the hedge funds push it over the $4 mark again," she said.

Fundamental factors also have bolstered copper prices. For one, "visible exchange stocks at the LME, COMEX, and Shanghai warehouses are critically low," Mohr noted. "We've only got about 3.5 days of global consumption on the major exchanges around the world."

Despite the negative economic news in the G-7 countries, she said, "the strength of emerging market demand—in places like China, India, Vietnam, Malaysia, Russia, and the Eastern European countries—is probably going to mean that world copper demand in 2008 is going to rise about 4 percent, and that could be a little improvement over last year's performance."

With about 1 million mt of new mine production expected this year, copper prices may gradually move down. That said, Mohr noted that "the many supply disruptions in recent years have averaged about 800,000 mt a year. When you factor in the mining difficulties we've already experienced this year, we're only going to have about 400,000 mt of new copper production"—not much more than the 300,000-mt average new production in the past few years. Given the limited supply scenario and growing world demand, Mohr forecast "higher copper prices this year rather than lower."

Nickel Continues Its Roller-Coaster Ride. A 16,000-mt surplus in the nickel market suggests that industry stocks will remain high, with limited LME price movement for the balance of this year, said Vanessa Davidson of CRU International (London) at the nickel/stainless spotlight. LME cash nickel is expected to average $13.91 a pound in 2008, she said. The costs of producing nickel pig iron will form a price floor for nickel, while the slow recovery of the stainless sector and the need to reduce nickel stocks will limit its upside potential, she explained.

Numerous other factors also will shape the nickel market in 2008 and 2009, Davidson said, pointing to positive economic prospects for the big stainless-consuming regions of China and Europe and the rapid emergence of the Chinese nickel pig iron sector while conventional nickel producers remain supply-constrained.

Assuming that demand recovers in 2009, nickel prices could rise to $14.80 to $18 a pound, Davidson said. By 2010, however, she expects "mounting quantities of nickel from new projects to move the market firmly into surplus and LME nickel prices to drop sharply to $10 to $12 a pound."

In the stainless steel market, "the boom cleaned out an unprecedented level of scrap units from the marketplace at the same time manufacturing was slowing," said Philip Rosenberg of Keywell (Chicago). Today, there's "a lot less" scrap available than even a year ago. When business slowed in the United States, stainless scrap units "exited the country in record volumes." In past cycles, he explained, scrap dealers held onto their material to wait for the market to turn. In the most recent market cycle, however, dealers stockpiled less material and, instead, feverishly exported it.

Looking at cobalt, Derek Benham of BenMet (New York) noted that the market "picked up smartly in the fall of 2007 and has continued into 2008." The metal's supply/demand equation has been "relatively well balanced in the past two years and, looking forward, the consumption outlook is very healthy."

One change could come from the Democratic Republic of the Congo, however, which might regain its prominent position in the cobalt market after declining for the past 20 to 30 years. "Should only 50 percent of its new production projects go forward as planned," Benham said, "the strong consumption growth in the market can be well-supported and we could expect surpluses and a declining price to be in evidence 12 to 18 months from now."

On a related matter, Benham voiced support for the LME's proposed cobalt metal contract, citing pricing anomalies in this specialized market. "The introduction of such a contract would bring the cobalt metal business into the 21st century and out of the murky backwaters of the minor metal or byproduct metal business," he said.

China Holds Key to Lead and Zinc Markets. China has dominated developments in the lead market with a 1.25 million-mt increase in lead demand from 2002 to 2007, said Huw Roberts of CHR Metals (Surrey, England) at the lead/zinc spotlight.

In that five-year period, China's mine production increased 8.2 percent to account for 38 percent of world production, while its smelting and refining output grew 12.3 percent for a 51-percent share of the global lead smelting market, Roberts said. In the same period, China's consumption of lead increased 16.7 percent, giving it a 30-percent share of world demand.

China began asserting itself in the global lead market in 2000, Roberts explained, noting that by 2006 the country was exporting almost 1 million mt of lead, about half as primary metal and half as batteries. In 2007, however, China's lead production "came crashing down" due to the Chinese government's elimination of value-added tax rebates for lead exports. That move reduced world supplies of refined lead by about 240,000 mt, he said. Elimination of the rebates has been a nightmare that has roiled the lead market. The problem is that if China doesn't export lead, Robert said, world consumption of lead declines.

A near-term market remedy is impossible because China is the only country that currently has surplus lead smelter capacity, he noted. New smelter projects outside of China are planned but can't be commissioned until 2009. "It may be 2010 to 2011 before sufficient smelter capacity outside of China can be commissioned to remove reliance on China's lead production," Roberts said. Given these market dynamics, he projected an average lead price of $2,410 a mt—or $1.09 a pound—for 2008.

Zinc is a different story, Roberts said, explaining that in 2008 the "rise in zinc mine output will exceed zinc demand growth for the fourth consecutive year." As with lead, "all of the action seems to be taking place in China, as zinc refining growth there dwarfs developments elsewhere."

This year, China likely will export 300,000 mt of zinc, making a relatively balanced world market, Roberts said. The Chinese government is threatening a tax on zinc exports, however, so "expect volatility," he advised, forecasting that the LME zinc price this year could be $2,500 a mt, or $1.13 a pound.

Transportation Issues Hamper Paper Shipments. It seems impossible to discuss any scrap commodity these days without first addressing the challenges of transporting it. At the paper spotlight, Kevin Duncombe of Western Pacific Pulp & Paper (Downey, Calif.) set the scene, providing an overview of the transportation issues affecting the scrap paper industry. From fuel prices to port fees to intermodal rates, transportation-related costs are on the rise, and they're affecting all scrap commodities—particularly paper, he said.

Because paper recyclers receive less return per shipped load than other commodities and because U.S. paper recyclers export much of their fiber to Asia, they are particularly encumbered by programs such as PierPASS at the ports of Los Angeles and Long Beach, Duncombe said. To reduce traffic congestion at the ports and reduce truck-related pollution during peak daytime traffic hours, PierPASS provides an incentive for cargo owners to deliver their shipments to the ports at night or on weekends. Cargo owners who ship during peak daytime hours must pay a $70 cargo fee per 40-foot container, he said.

Pointing to another challenge at the Port of Los Angeles, Duncombe noted that only drivers from unionized companies that have contracts with the port may ship paper from a recycling facility to the port. "That means that I, as a recycler, can't use my own trucks and employees to ship my own material to the port," he said. Though these export barriers currently only affect California, they could migrate elsewhere, he cautioned, stating, "This is only going to continue to affect recyclers across the country."

Offering a European perspective, Ranjit Baxi of J&H Sales International (London) noted that the European Union is experiencing many of the same transportation difficulties as the United States and called for a dialogue between transportation providers and scrap exporters. "The shipping lines must implement freight charges in the United States and the EU simultaneously to promote stability in export pricing" and to prevent an imbalance that favors one continent, he said.

Lending a rail industry perspective to the discussion, Steve Potter of CSX Transportation (Jacksonville, Fla.) described how his company is making its rail service more reliable, fuel-efficient, and customer-service oriented. As population growth drives consumption in regions such as the Northeast, Gulf Coast, and Midwest, he said, industrial production and imports increase. "Highway capacity has not kept up with demand, and the continuing highway congestion in the United States frankly favors rail service," he stated. Given that rail's market share among transportation modes is up 20 percent from 2000, he said, "people are simply going to be more likely to turn to rail than trucks."

Potter also emphasized rail's environmental benefits. "One train can carry the load of more than 280 trucks, and those trains can move 1 ton of freight 423 miles on 1 gallon of fuel," he said. In the past year, he added, CSX has invested more than $1 billion to upgrade its fleet with environmentally friendly locomotives to reduce fuel consumption and emissions.

Will China Shake Up the Scrap Rubber Market? Though China dominates several scrap commodity markets, it has yet to affect the scrap rubber niche. That said, experts suspect that the country's interest in recycled rubber and rubber-content products is on the upswing. This year's rubber spotlight presented the scrap paper industry's experience in China as a potential sign of what's to come for rubber.

Pete Grogan of Weyerhaeuser Recycling (Federal Way, Wash.) reviewed the state of the paper market in China, noting that it more than doubled its paper and paperboard production from 1994 to 2006, from about 27 million tons to 70 million tons. To feed that production growth, he said, China significantly increased its imports of scrap paper and could consume 20 percent of the world's recovered fiber by 2020.

China's paper demand is a reflection of its burgeoning consumer culture, Grogan noted. He compared the country's current state to milestones in U.S. history. "China is simultaneously dealing with the raw industrial capitalism of the 1800s, the financial mania of the 1920s, the rural-to-urban migration of the 1930s, and the emergence of such ‘firsts' as college and homes of the 1950s," he said. "And we have to examine, from a resource perspective, whether the world will be able to handle it."

Giving an overview of China's domestic tire recycling, Nai-Xiu Ding of Qingdao University of Science and Technology (Qingdao, China) noted that China generates about 160 million scrap tires a year, second only to the United States. By 2010, she expects that number to reach 200 million. The country recycles about 60 percent of its scrap tires, using most in reclaimed rubber products and a minority of them in tire-derived fuel, she said. Markets for recovered tires in China include retreading and crumb rubber applications. If unsuitable for retreading, whole tires are reused as fenders, road markers, and floating lighthouses, among other applications.

China's major challenge in tire recycling is its lack of an efficient tire recovery infrastructure, which translates to high recovery costs, Ding said. In the next five years, China could establish a system to address its collection issues as well as its growing tire stockpiles in certain areas, she noted. As the country continues to develop rubber products, Ding expects to see rapid developments in China's rubber processing technology, which could enable crumb rubber to eventually account for half of its tire recycling activities. In her view, China's prohibition on imports of scrap tires from the United States will limit the growth of its rubber recycling industry, especially compared with other import-reliant scrap commodities.

Questions about China's potential effect on the recycled rubber market will stay unanswered in the near term, the panelists agreed. In the long term, however, it could be considerable. 

Thinking Big
For the first time, the ISRI convention offered "thought leadership" sessions that examined several big-picture issues, namely China and sustainability.

Critiques and Cautions on China. China may be the fastest-growing country in the world, with an average annual GDP growth of 9 percent for the past two decades, but "it is lost in the political direction that it is heading," said L.C. Russell Hsiao, associate editor of China Brief, published by the Jamestown Foundation (Washington, D.C.).

Speaking at the thought leadership workshop on China's future impact, Hsiao asserted that "China doesn't seem to be following a single trajectory, which in turn greatly heightens the risks and difficulty of analyzing China's future impact." What is clear to Hsiao is that China's political system has become increasingly inept at dealing with the country's economic and societal changes, which are driving it in multiple directions while the central authority tries desperately to maintain its control.

"The farther one is from the central authority, the more one enjoys relative freedom," he explained. China's provincial economies have different levels of freedom, which contributes to "the complex and often contradictory nature of China's domestic geopolitical landscape" and makes it difficult "to formulate uniform assessments about China's global trajectory."

China's economic growth and the sustainability of the Chinese Communist Party both rely heavily on foreign resources, and that dependence "should make China more susceptible to higher levels of foreign influence in the establishment and enforcement of its economic rules," Hsiao said. Currently, this isn't the case, so any of the CCP's economic measures should be taken with "a grain of salt," he said, because "they are meant to stabilize domestic politics, maintain control, and improve the CCP's economic management, and nothing more."

Adding to the China discussion, David Chiao of Uni-All Group (Atlanta) warned that "if the Chinese economic bubble bursts, a world financial crisis is unavoidable." He sees the country moving from its production of highly labor-intensive products to medium labor-intensive products such as automobiles and appliances. Also, given China's growing economy, its energy shortage will continue "unless there's some replacement of China's current utilization of natural resources," Chiao said. In addition, its environmental issues will escalate, which could mean that shippers of scrap to China could see their shipments "subjected to higher and higher requirements."

Peter Navarro, a professor at the Paul Merage School of Business at the University of California, Irvine, and author of The Coming China Wars, then asked the question on every scrap exporter's mind: Will China continue its robust demand for recycled materials? In other words, will China be El Dorado or Armageddon?

In his view, the Armageddon scenario is at least as probable as the El Dorado outcome, so scrap exporters must "rationally assess the probabilities of each scenario and hedge and mitigate your business risk accordingly." He urged scrap shippers to do their due diligence. "Most American companies operating in China fail to do an adequate risk assessment and sometimes put too many eggs in the China basket," he stated.

Tracking Your Carbon Footprint. Climate change, caused by the warming of the Earth's surface due to increased concentrations of greenhouse gases in the atmosphere, has the potential to dramatically affect economic and social systems—including the scrap industry, said Tod Delaney of First Environment (Boonton, N.J.) at the thought leadership workshop on sustainability.

Scrap processors should determine their carbon footprint to prepare for potential regulatory issues and to explore the possibility of trading carbon credits on carbon exchange markets such as the Chicago Climate Exchange, Delaney said. In this way, processors can determine their potential exposure and hedge against future regulation and mandatory reductions, he noted.

The main greenhouse gas emissions from scrap recycling activities are carbon dioxide, methane, and nitrous oxide, Delaney said. Direct emissions, primarily from the use of fossil fuels, come from sources that the company owns or controls, he explained. Indirect emissions come from sources owned or controlled by other companies, such as emissions generated by a recycler's electricity provider.

To determine their carbon footprint, recyclers should conduct an inventory that identifies, classifies, and calculates the emissions of sources including trucks; on-site vehicles such as forklifts, wheel loaders, and material handlers; stationary combustion producers such as furnaces, generators, and torches; electrically driven equipment such as balers, shears, and shredders; as well as lighting, Delaney said.

In this regard, Sims Metal Management (New York) has formed an energy management team and undertaken energy monitoring, audits, and action plans, said Scott Miller, the company's chief corporate counsel for EH&S compliance. The company considers energy issues whenever it procures new plants and equipment, with preference given to sustainable fuels and energy sources. The firm's employees also include efficiency checks in routine maintenance on equipment.

Sims' additional energy-conscious initiatives include shredder motor upgrades, transport fleet improvements, a diesel idling policy, proper equipment sizing, low-energy air compressors, outdoor lighting, and the use of a demand-response program for electricity. The company also has tracked its monthly energy usage (electricity, diesel, other petroleum fuels, and natural gas) per region and per facility since early 2006, Miller said. In addition, for one U.S. region, the firm just completed a detailed, verifiable carbon baseline and is considering implementing that action in all of its U.S. operations. "Not surprisingly," he said, "the majority of our carbon emissions result from either usage of electricity in stationary equipment or diesel in mobile equipment, roughly in equal parts."

For scrap companies, the climate change issue presents legislative and regulatory risks, such as the potential for cap-and-trade legislation, and physical risks such as the potential for changing weather patterns to damage scrap facilities.

Conversely, Miller sees numerous potential business benefits, including the ability to accrue and trade allowances and offsets, improved operating efficiencies, lower energy costs, higher employee motivation thanks to being part of a global effort, and positive perceptions by shareholders, regulators, nongovernmental organizations, and communities in which one's scrap plants are located.

—Jim Fowler, Lindsay Holst, Kent Kiser, and Rachel H. Pollack