August 2, 2008
Sellers, Buyers Scrap Over Metal
By Stephen J. Lee, Grand Forks Herald, N.D.
Aug. 2--There is nothing useless, junky, abandoned or trifling about the scrap metal business these days, despite how the dictionary defines scrap.
Nothing better illustrates that than the mountains of rusty and faded iron towering over and bulging into fences at the Residual Materials Inc. yard on Mill Road, on the north edge of Grand Forks. These hills are a sign of a worldwide bull market for scrap steel, copper, brass and aluminum.
In one heap 25 feet tall, a polyglot combination of aged combines -- a green John Deere, red International Harvester and Massey Ferguson, a galvanized steel Gleaner -- are scrunched against, over or under one another, closer than they ever fraternized in the farm fields of yore.
Another pile is hundreds of rusty wheels. Here are massive and bridgeworthy I-beams, cultivator shovels, long pipe, discs of all sizes and ex-uses.
Elsewhere in this yard lie what these scrapped steel stuff may become: cubes of metal mashed and smashed into surprisingly compact, compliant and heavy packages 2 feet by 3 feet by 4 feet, stacked along the railroad track, waiting to be shipped to furnaces somewhere in the United States, maybe St. Paul, to be remade into new steel.
Residual Materials ships much of its scrapped copper, brass and aluminum to China.
Although there has been a small summer plateau in prices, prices for scrap metals are at or near all-time highs.
It's really more than Residual Materials can handle, Dusty Gibbs said. He and his brother, Mitch, own the company; his son, Tyler, is the site manager.
"The combine pile out there is just crazy," Tyler said Friday of the used farm harvester trade. "We've never had that many combines in here like that."
Their father, Jim Gibbs, started out 30 years ago salvaging computers and other technological equipment from missile sites across northern North Dakota.
After the Flood of 1997, they began dealing in general scrap metal.
The growth of late has been "phenomenal," Dusty said. "When we started taking in steel after the flood, we got maybe a couple hundred tons a month."
In the past year or so, the market went nearly wild.
"We took in over 5,000 tons one month," he said. "We had no time to prepare or load. We just emptied trucks from morning till night."
Now it's regularly 3,000 tons or more.
On a recent day, Alan Watson, a farmer from Buxton, N.D., pulled into RMI's weigh station in his pickup, pulling a trailer full of the cut-up pieces of a 40-year-old John Deere corn planter.
The planter, which he used when he started farming, had been sitting in his farm yard for years, Watson said.
"This is really just a good chance to get the yard cleaned up," he said.
He first took a cutting torch to the planter to break it into small pieces to get the top scrap price of $180 per ton for "prepared" steel.
Some days last spring, there were long lines of people hauling in trailers of junk, from lawn mowers to bicycles to wheels.
Dusty and Mitch Gibbs also own two much larger salvage yards in north Minneapolis, Kirschbaum and Krupp, and Re-Alliance, where they handle many times the amount of scrap metal they take in Grand Forks. The price of copper has been about $3 a pound for a year or so, which has sparked not only great business, but a crime wave of sorts as crews of thieves tear plumbing and wiring out of abandoned, empty or for-sale homes and try to sell it on the scrap market.
That's why Residual Materials requires every seller who walks in to provide a driver's license, which is scanned into a computer database. Photographs are taken of materials bought, Dusty Gibbs said.
"Steel is really the leader," Dusty Gibbs said. "In the past, every pound, every ton of scrap steel was consumed here in the United States. But what is happening now is worldwide demand for that steel and (the fall) in the U.S dollar has made our scrap desirable for companies all over the world."
Little steel is being imported into the United States now from Japan, China or Turkey, mostly because of the weak U.S. dollar, as well as growing demand in the those nations.
Like the oil and wheat produced in North Dakota, the scrap iron also is part of a world market.
This spring, EMR, or European Metal Recycling, based in England, bought the former Billington Salvage yard in Bismarck, said Scott Lunneborg, manager of the Bismarck site.
EMR has several yards in Minnesota and one in Milnor in southeast North Dakota, and dozens all over the world, finding ways to gather up and re-use the tons of junked steel, copper, aluminum and other metals that make the world go round.
Most of the scrap metal yards in North Dakota are owned by American Ironworks in St. Paul, which is in turn owned by Brazil-owned Gerdau Ameristeel, which runs the only steel plant in Minnesota or North Dakota, Dusty Gibbs said.
Trip to China
Next month, Tyler and his father, Dusty, will go to China, one of the regular trips their company makes to where much of their scrap copper, brass and aluminum go.
The Gibbs' partner, Henry Wang, sells the shipped scrap metals to manufacturers across China. The cheap dollar and cheap labor and a swelling economy in China make it all work.
Copper wire North Dakota and Minnesota can be shipped with the plastic insulation still on, to be stripped off in China and recycled, Gibbs said. "Nothing hits the landfill over there."
Reach Lee at (701) 780-1237; (800) 477-6572, ext. 237; or send e-mail to [email protected]
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Copyright (c) 2008, Grand Forks Herald, N.D.
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