“The demand for high-quality, recycled aluminium scrap, beginning sometime in 2024 or 2025, will be greater than the supply,” Peter Nagusky, President and CEO of the Federal Metal Company

Peter Nagusky is the President and CEO of The Federal Metal Company, an industry leader in cast copper-based alloys since 1913.  Federal Metal has melting facilities in northeast Ohio and eastern Pennsylvania, and recently opened a new processing operation in central Arkansas that specializes in recycling aluminum copper radiators.  To complement the core business established by his great grandfather, Peter is making major new investments to supply rolling mills with high purity aluminum and copper products.

Let’s hear from Peter about the demand and supply growth of aluminium scrap and how improved sorting technologies can lead to a better recycling output.  

AlCircle: Recycled aluminium content in end-use products is rapidly replacing the primary metal. Is this resulting in immense responsibility for your company to deal with good quality scrap?

Peter Nagusky: There are significant economic and environmental benefits to replacing primary aluminium with scrap, but only if the scrap supply can reliably meet customer requirements.  This is a huge responsibility, to be sure, and one we feel particularly well suited for.  Since 1913 we have been manufacturing certified copper-based alloys for the foundry industry, made entirely from scrap and produced to very stringent specifications.  Our aluminium rolling mill customers appreciate that we have this aligned perspective as a consumer of scrap ourselves.  Like them, we have no tolerance for inconsistent quality in our raw material.  That’s why we design and maintain strict process control parameters, deploy the latest sorting technologies, and remain committed to the highest product quality standards.

AlCircle: Do you think the aluminium recycling industry is tooled with modern sorting technologies? (Kindly detail it as per your company view)

Peter Nagusky: Our expertise is processing one very specific raw material type: aluminium copper radiators used mainly in heat exchange, air conditioning, and refrigeration applications.  Since we aspire to be the best in the world at recycling these post-consumer radiators, we need the best sorting technologies.  We are building the most advanced recycling facility of its kind, specializing in generating large volumes of direct melt, high purity 1100 aluminium with 0.20% maximum copper.  Put simply, that wouldn’t have been possible ten years ago.

AlCircle: Could you please share the current status of your upcoming project in North Little Rock, Arkansas, where you plan to sort aluminium-copper radiators?
 
Peter Nagusky: We are currently installing the equipment and actively hiring staff.  We will be operational during the third quarter of this year.  This project will give us the capacity to recycle 3,000 metric tonnes per month under one roof, in a location convenient for our supplier partners and close to several key aluminium customers.  This project was an outgrowth of our success in Ohio, where we recycle more than 800 tonnes per month, and where we developed our proprietary PSA® (pre-melt specification aluminium) direct melt products. 

AlCircle: Besides this project, is there any other in your pipeline for this year to increase the aluminium scrap supply?

Peter Nagusky: The project in Arkansas is our primary focus this year.  We are optimistic about the future of aluminium scrap recycling in the United States, though.  We’re currently evaluating a new project that would require additional investment and further increase our supply of high purity aluminium.

AlCircle: Can you please share your short-term and mid-term projections for the aluminium recycling industry in the United States? 

Peter Nagusky: Here in the United States, we expect de-stocking to continue in the short term.  A lot of inventory still needs to work its way through the system.  In the midterm, though, the pendulum will start swinging in the other direction.  The demand for high-quality, recycled aluminium scrap, beginning sometime in 2024 or 2025, will be greater than the supply.  There are new investments in rolling mill capacity here for the first time in a generation, and domestic UBC recycling rates remain low.  We expect a long-term deficit to emerge, where scrap discounts will tighten.  I think it’s possible you’ll see historically high price levels, with some of the higher purity grades at parity or even at premiums to the Midwest transaction price. 

AlCircle: Do you think global inflation will lead to more consumption of aluminium scrap to reduce the end-product price?

Peter Nagusky: I think we are definitely moving towards greater consumption of aluminium scrap worldwide, but not because of global inflation. 
 
AlCircle: Which manufacturing industry, according to you, will drive the global consumption of recycled aluminium?

Peter Nagusky: Our focus is primarily on foil, packaging, fin stock, and beverage cans. We’ll be watching those sectors carefully. But because using aluminium scrap is economically advantageous and environmentally sustainable, and because the end consumer preferences favour the most recyclable materials, there will be a lot of industry sectors contributing to increases in global consumption.