[GRRN] Recycled Aluminum

RecycleWorlds (anderson@msn.fullfeed.com)
Thu, 11 Mar 1999 10:38:21 -0600

The following article in today's Wall Street Journal illustrates how the
augmentation of recovered materials, in this case aluminum in automobiles,
can reduce the commodiy cycle risk for manufacturers. Perhaps the same
principle could be extended to other materials and products.

Peter Anderson

March 11, 1999

General Motors Inks Long-Term Pact To Buy IMCO's Recycled Aluminum


DETROIT -- General Motors Corp. agreed to buy more than $1 billion of
recycled aluminum from IMCO Recycling Inc. of Irving, Texas, in the next 13
years. The pact is the latest in a series of long-term supply deals that GM
has concluded in an effort to reduce costs and eliminate wide price
fluctuations for the metals it uses to make cars and trucks.

John Stiles, GM's executive director of world-wide purchasing, metallic,
said the agreement will allow GM designers and engineers to plan for
increased aluminum use in future vehicles without fear that a sudden change
in market prices would make the cost prohibitive. GM's current models use
average of 271 pounds of aluminum for each vehicle, up 29% from 1998.
Because aluminum is lighter than steel, the traditional metal for
automobiles, it offers a variety of fuel-economy and emissions benefits.

Last year, GM announced a 10-year supply pact with Alcan Aluminium Ltd. for
primary aluminum, and last month, GM reached four-year contracts for its
world-wide steel needs with about 40 steelmakers. In the past, metals
contracts ran for shorter periods. Mr. Stiles said the longest contract the
company had signed for secondary aluminum was for three years.

Under the new deal, IMCO will build a new $22 million plant about three
miles from GM's casting operation in Saginaw, Mich. IMCO will deliver
aluminum in special trucks on a just-in-time basis to the GM plant, saving
GM the cost of melting the metal again. At full production, the new plant
also will supply other GM operations, as well as suppliers' plants,
GM and IMCO officials said. Between 25% and 50% of the scrap metal IMCO
will come from GM plants, officials said.

The companies declined to provide financial details of the contract. Until
the new plant is operational next year, IMCO will deliver solid metal to GM
from its other operations.

In New York Stock Exchange composite trading Wednesday, IMCO shares soared
$2.9375, or 25%, to $14.75, and GM shares fell 56.25 cents to $87.875.