SCRAP MANAGEMENT & CLOSED LOOP RECYCLING

Transcription

1 SCRAP MANAGEMENT & CLOSED LOOP RECYCLING Gary Gallo Manager, Automotive Recycling, Novelis North America SAA Lightweighting Summit, Detroit, Michigan, USA September 25, 2017

2 SCRAP MANAGEMENT & CLOSED LOOP RECYCLING Novelis Introduction Aluminum Scrap Management Scrap Markets & Drivers Closed Loop Recycling Summary

3 NOVELIS EXPERIENCE & EXPERTISE #1 Producer of flat-rolled aluminum World s largest supplier of automotive aluminum sheet, with 50% market share Leader in the 2 largest Closed Loop Recycling programs in the world at JLR & Ford Increased capacity by 250% in the past three years globally and six fold in China and North America Novelis aluminum can be found in more than 180 vehicle models 40 Years of automotive experience with 134 automotive specific patents 3

4 UNMATCHED AUTOMOTIVE GLOBAL FOOTPRINT NORTH AMERICA Rolling Recycling Automotive Finishing EUROPE Rolling Recycling Casting Equipment Laser Cutting Automotive Finishing

5 STRATEGIC SUSTAINABILITY OBJECTIVES Our increased use of recycled aluminum is central to our shift toward a lower-carbon, increasingly circular business model, it s just one element of our broader strategy. Our sustainability strategy is focused on the following key objectives at each stage of our value chain. Sourcing Reduce the embedded carbon in our products by increasing recycled content Re-engineer and minimize risk within our supply chain Customers Provide value to our customers, particularly by helping them meet their sustainability objectives Manufacturing Maintain safe and efficient operations and minimize natural resource use Ensure an adequate supply of talent Maintain our social license to operate Consumers Increase post-consumer recycling of aluminum Help our customers make sustainable products that consumers want 5

6 LIGHTWEIGHTING SOLUTIONS Integrating aluminum reduces the weight of a vehicle without compromising safety and strength. The aluminum-intensive Ford F-150 is more than 700 pounds lighter than previous models and achieved the truck s first-ever 5-star safety rating from NHTSA. Jaguar Land Rover chose Novelis aluminum to reduce weight on the Range Rover and Range Rover Sport models with weight savings of greater than 400 kg per car By partnering with Novelis, automakers can create the strongest, lightest, highestperforming and most energyefficient vehicles that their customers want and need. 6

7 AUTOMOTIVE PRODUCT PORTFOLIO Our product portfolio consists of the latest advances in product development. CM Crash Management Advanz 6CM s118 Advanz 6CM s300 Advanz 6CM* HS High Strength Advanz 6HS s615 Advanz 6HS e/s600 Advanz 6HS* UHS Ultra High Strength Advanz 7UHS* F Forming Advanz 5F s5754 RC Advanz 6F e170 Advanz 6F e608 HF High Forming Advanz 6HF e/s200 Fusion 6HF s200 RW Fusion 6HF e200 Standard Alloys AA5052 AA5182 AA5754 AA6014 AA6016 AA6111 AA6451 AA7075* *in development

8 CREATING SUSTAINABLE VALUE THROUGH CLOSED-LOOP SYSTEMS Closed-loop recycling allows us to take back as much of our customers aluminum scrap as possible, turning it directly back into the same product again. Closing the loop preserves the value of the alloy, reduces recycling and transportation costs, minimizes environmental impact and establishes a secure supply chain. SCAP YARD PROCESSING & SEGREGATION SCRAP DECOATING 8

9 ALUMINUM SCRAP MANAGEMENT 9

10 AUTO SCRAP ALLOYS & DESIGNATIONS High Mg 5182 Mixed 6xxx Mixed 5xxx MLC Alloys are examples of typical automotive alloys Low Cu 6016 High Cu 6111 Low Mg xxx 10

11 SEGREGATION SOLUTIONS: INTEGRATED SCRAP HANDLING Compass Systems uses rotary knife shredders to shred engineered press scrap. Each press has a dedicated shredder that is connected to pneumatic conveyance systems. Scrap is blown in dedicated & spotted trailers. Compass scrap shreds can be designed to meet agreed program specifications. Here scrap is 2 x 16 11

12 SEGREGATION SOLUTIONS: INTEGRATED SCRAP HANDLING Tiers use color coded systems for segregation and identification Some Tiers carry the segregation thru to job orders, dies and scrap boxes. Here scrap is processed at Ferrous Processing & Trading. In this case, yellow is used to designate low copper 6xxx scrap from a tier and carried thru at Ferrous Processing & Trading 12

13 ALUMINUM SCRAP MARKETS & DRIVERS 13

14 Where Does All the Scrap Go? Cast aluminum (i.e. A380): Has metallurgical limitations to the volume they can consume Extrusion Billet: Currently purchasing MLC and segregated alloys but have limited ability to consume an increasing overall volume of auto scrap Aluminum Mills (Flat Rolled Products Producers): Currently Novelis and Arconic consume virtually all aluminum sheet scrap returned through Ford s F-150 Closed Loop Recycling program. Novelis consumes all Jaguar Land-Rover aluminum sheet scrap in Europe.

15 The Scrap Market: Driving Influences Ducker: Aluminum sheet for closures is expected to grow by 2.5x by 2020

16 The Scrap Market: What Lies Ahead? Ducker s View This represents a 2.5x increase

17 The Scrap Market: Driving Influences Ducker: Aluminum sheet for closures is expected to grow by 2.5x by 2020 New automotive scrap coming to the market is not currently tied to closed loop programs and will add pressure to existing markets The scrap industry has never seen this volume of scrap come into the market there is no historical reference for pricing or consumption capacity Coil and extrusion imports will add additional scrap to the market that may not be exported creating additional market uncertainty Relative to the MWTP, MLC prices have fallen steadily in the past last year Spot scrap sales are at a significant risk to market fluctuations

18 Market Factors Impacting Scrap Price Aluminum coil production starts with an ingot. Mills can either produce or purchase an ingot. Both options generate runaround scrap at the mill. Producing an ingot can be done with prime and hardeners and/or via the consumption of scrap Most mills have the ability to remelt their own runaround scrap Producing ingot that uses purchased scrap and runaround requires unique recycling furnace capabilities Finding a mill that requires purchase scrap units is critical to maximizing scrap value

19 Closed-Loop Recycling

20 Elements of Closed-Loop Recycling Segregated alloys create greatest value Scrap collection, processing, transportation and recycling systems designed to handle large-scale recycling Ability to accept scrap in shredded, bales or loose form Scrap (free of moisture, ferrous and other contaminants) reduces need for additional processing, increases value

21 Elements of Closed-Loop Recycling Having integrated remelt & recycle capacity that requires purchased scrap is critical Find a mill that can recycle like-alloy auto sheet from other suppliers Determine if your mill and can accept, process and recycle assembled parts, heads & tails and whole unit losses Identify if your supplier has established local scrap partnerships to handle both ferrous and non-ferrous metals as well as provide in-plant logistics services Investigate options to link coil purchase price and scrap sales price to the same index, such as Midwest Transaction Price CLR provides scrap units to increase recycled content

22 Benefits of Closed-Loop Recycling Provides guaranteed market for large volumes of manufacturing scrap over life of program Allows hedging opportunities with new coil purchases, reducing risks to market fluctuations Supports recycled content objectives and lowers prime consumption

23 SCRAP MANAGEMENT AND CLOSED LOOP RECYCLING SUMMARY Aluminum sheet usage in automotive is expected to increase 2.5x by 2020 Scrap generation from domestic and imports will likely tax existing markets until industry adds sufficient recycling and casting capacity Maximizing scrap value starts with segregation and choosing solid scrap partnerships including equipment OEMs, scrap service providers and aluminum mill consumers Closed Loop Recycling programs offer protection from market price swings 23

24 THANK YOU Follow us at: facebook.com/novelisinc twitter.com/novelis linkedin.com/company/novelis novelis.com/careers 2017 Novelis 24