From The Advocate

Smelter interest intensifies

30 Dec, 2011 01:00 AM

INVESTOR interest in a major Tasmanian silicon smelter - possibly at Port Latta - appears to be growing.

Kingston-based MHM Metals last week told the ASX it was continuing to "engage numerous expressions of interest" for developing a silicon smelter in Tasmania.

"Work continues on site selection, power supply agreements and the supply of sufficient timber for production of charcoal needed for the process.

"Should this smelter materialise, it will be a very large undertaking for MHM and considerable progress is being made concerning investigation of financial and corporate structures that maximise shareholder benefits.

"MHM is actively engaged with corporate advisers in this regard."

Executive director Simon Wells yesterday declined to say if Port Latta was in the mix.

He said MHM was doing due diligence on more than one site.

It is not yet clear how many jobs such a smelter would create, or what the project cost would be.

"The most important priority for the company, when considering a possible project site, is the cost of delivered electricity."

Circular Head Mayor Daryl Quilliam said Port Latta would be a fantastic site for such a project and the State Government had done much work readying Port Latta for heavy industrial use.

The State Government's "jobs detective", Brenton Best, said: "I'll certainly be keeping a close eye on this exciting prospect, including the possibility of any processing, transport or value- adding opportunities across Braddon.

"While it sounds like quite early days, I'd welcome the opportunity to discuss those opportunities with MHM and hear the company's ideas about how the government can help to support its goals.

"We know Port Latta, in particular, is an important jewel in the crown for Tasmanian mining, offering excellent processing and transport opportunities."

In November, MHM managing director Frank Rogers said the company was continuing to develop its silica division, with emphasis on getting supply contracts to "underwrite" the Tasmanian development.

"Additionally, considerable effort has been devoted to securing silica reserves, in addition to those held by the company on the West Coast of Tasmania."

Link

December MHM COMPANY UPDATE

MHM COMPANY UPDATE

ASX Release – 22 December 2011

• Steady-state operations in Geelong, with salt slag recycling plant  operating to specification and AL80 plant in final commissioning phase
• 24-hour operations to commence in January
• Significant progress for completion of AL80 customs paperwork, delays unrelated to product performance
• US site announced in Russellville, KY with settlement scheduled for late Jan 2012
• Existing building to assist with project development costs and timeframes
• Considerable government grants and incentives to assist with project development
• Additional contract negotiations ongoing
• Financial modelling to be provided in due course
• Project finance favouring non-dilutionary mechanisms with roadshow planned to increase investor awareness and provide on-market support



AUSTRALIAN ALUMINIUM OPERATIONS UPDATE


Geelong salt slag recycling operations are performing to specification, with 
steady-state operations underway.  Alreco will operate on a two-shift until after 
the Christmas period, with three-shift 24-hour processing due to commence in 
January 2012.  The stockpile of partly-processed salt slag is expected to take 
three months to  reduce, and upon completion the processing of Alcoa’s 
160,000 tonne salt slag landfill will commence. 


MHM has made significant progress in the finalisation of customs paperwork 
relating to export of AL80, Alreco’s aluminium oxide product.  The delays are a 
bureaucratic matter and completely unrelated to the desire of the end user to 
purchase the product.  Impex Metals, Alreco’s contract partner for export of the 
material, had been assuming responsibility for managing finalisation of customs documentation.  However, 
Alreco has now assumed responsibility for this and has invested considerable resources to expedite the 
process.  The company remains highly confident of resolving the issue.  It should also be noted that Alreco 
has alternate avenues for selling the AL80 product, however the company remains mindful of maximising 
long term economic returns rather than short-term interests of sending the first shipment of product.  
Management remains committed to an expeditious resolution of this issue.



US ALUMINIUM OPERATIONS UPDATE


Site Selection


As recently announced, US subsidiary MHM Metals Corporation has negotiated to acquire a 115-acre 
landholding in Russellville, Kentucky. The site contains a number of existing buildings that should decrease 
the time and expense of plant construction.  The site is zoned correctly for its intended purpose.  
MHM will operate the site, and the entire US aluminium business under the name Alreco, as  occurs in 
Australia.  MHM has a pending US trademark for the Alreco name and the Alreco logo.
After assessing over 30 sites throughout the middle Tennessee and southern Kentucky region, the Russellville 
site is the preferred location for plant construction.  Factors that contributed to this include:



Identification of in excess of 350,000 tonnes per annum of salt slag and black dross within an 
economic radius of the plant site


• Large acreage providing Alreco the opportunity to grow and assimilate planned future technology developments
• Government support and incentives, not only financial but also the pro-business environment in Logan County
• A highly skilled local workforce and availability of workers
• Availability of rail, with a high-quality rail operator
• Availability of ample electricity supplies to the property for initial and future requirements


While MHM had initially favoured a site in southern Tennessee close to  two large salt slag producers, 
management made the strategic decision to locate further north.  The Russellville location remains an 
economic distance from these two secondary aluminium companies, but makes the facility less dependent on 
volumes produced by these two companies by introducing additional salt slag and black dross producers 
further north.  This strengthens MHM’s negotiating position for future contracts, with Alreco’s facility less 
reliant on any volume fluctuations from the two large producers on account of a changing business 
environment.  As most US secondary aluminium producers operate on short-term contracts, the supply of 
salt slag over the long term can fluctuate and as such it is in Alreco’s best interests to locate further north to 
access additional producers to lower supply volume risk over the long term.  


Government Grants and Incentives


The Kentucky Economic Development Finance Authority has approved Alreco for tax incentives of up to 
$825,000 through the Kentucky Business Investment program.  The performance-based incentive allows 
Alreco to keep a portion of its investment over the term of the agreement through corporate income tax 
credits and wage assessments by meeting job and investment targets.
The City of Russellville, Logan County and the Logan County Industrial Development Authority have approved 
a further $250,000 infrastructure grant to Alreco.  These funds will be paid against expenses incurred for 
development of site infrastructure including a rail spur, electrical transmission, water and gas lines and site 
preparation works up to the agreed $250,000 cap.


Contract Negotiations


Contract negotiations continue to progress in the United States, as MHM Metals Corp works to add additional 
processing volume to the three supply contracts already signed.  It is anticipated that the company will 
continue to secure contracts over the course of the plant construction and commissioning.  A number of 
companies have expressed keen interest in supporting MHM’s initiative however due to the nature of their 
operations do not wish to commit contracts until the plant is operational.  Given a cost competitive 
alternative to landfill, MHM can see no reason why any company would not choose the more environmentally 
responsible alternative of salt slag and black dross recycling.


US Income Projections


MHM will provide financial projections for the US operations in due course.  While internal financial models 
have been generated, these cannot be provided as they may lead to revealing the underlying contract 
counterparties.  Any identification of the contractual counterparties introduces short-term operational risks 
for these counterparties.  Financial forecasts will be disclosed following additional supply contracts.
Salt slag landfills / stockpiles


MHM continues to assess landfilled/stockpiled salt slag that may present opportunities for recycling, with 
ongoing discussions to assess viability.


Project Finance


Management continues to assess project-financing alternatives and believes a number of options will be 
available.  As always, management will have utmost regard for minimisation of shareholder dilution as we 
work to maximise Earnings Per Share and in turn the share price.  The timeframe for completion of project 
financing will follow finalisation of plant design, costing and scheduling which is expected to conclude over 
coming months.

Investor Roadshow


Management anticipates undertaking an Australian and international investor roadshow early in 2012 to 
inform and engage new investors with the MHM story and continue to support the share price wherever 
possible.  A number of broking houses are expressing an interest in publishing research on MHM, which is 
also expected to be highly beneficial for the company.




SILICA DIVISION UPDATE


MHM continues to make positive progress for the silica division, with an emphasis on obtaining supply 
contracts to underwrite the development of a Tasmanian silicon smelter.   Additionally, considerable effort 
has been devoted to securing silica reserves that may help fast-track production and offtake and lower costs 
of production.


MHM continues to engage numerous expressions of interest for development of a silicon smelter in 
Tasmania.  Work continues on site selection, power supply agreements and the supply of sufficient timber for 
production of charcoal needed for the process.


Should this smelter materialise it will be a very large undertaking for MHM, and considerable progress is 
being made concerning investigation of financial and corporate structures that maximise shareholder 
benefits.  MHM is actively engaged with corporate advisers in this regard.


EXPLORATION UPDATE


The Board of Directors has made a strategic decision to discontinue any further exploration activity, and is 
actively seeking divestment opportunities for exploration projects. This is a key decision for MHM, signifying 
an absolute move out of mineral exploration.  This does not include the silica assets, which continue to be 
retained but do not require any significant exploration or development at the present time.  Future resource 
development for silica will be contracted out, and as detailed above management is undertaking analysis of 
the best corporate and financial structure for the silica division.  


The board has given notice to the geological staff of the decision to cease all further exploration activity, and 
commenced a notice period for cessation of employment.  The decision to discontinue all further activity in 
this regard will save MHM approximately $300,000 per annum in salary payments alone.  Management 
expresses sincere gratitude to the geological team and wishes them all the best for their future endeavours.

sky business - ben mead interview

MHM US Site Selection and Incentives

MHM FIRST US SITE IN KENTUCKY WITH PROJECT INCENTIVES
ASX Release – 13 December 2011

· Preferred site is 115-acre industrial landholding in Russellville, Kentucky
· Existing buildings on site and property zoning to benefit timeframes and lower costs
· MHM has identified over 350,000 tonnes per annum of salt slag and black dross within an economic radius. Rail availability may further extend this economic distance 
· Plant further north than originally anticipated to increase number of potential customers
· Kentucky Business Investment Program preliminary approval for US$825,000 performance-based incentive
· Local government pledge of US$250,000 for infrastructure-related expenses
· Further benefits possible via Tennessee Valley Authority, both from Valley Investment Initiative and possible low interest financing through the Economic Development Funds facility
· Details of site location and incentives confirmed today in ceremony/media conference with Alreco, Ofce of the Governor of Kentucky, Mayor of Russellville and the Logan County Judge Executive



MHM Metals Limited (ASX:MHM) confirms the proposed property acquisition for construction of Alreco’s first 
US salt slag and black dross recycling facility including details of government grants and financial incentives.
The brownfields industrial site comprises 115 acres in Russellville, Kentucky and contains a number of 
existing buildings that is expected to decrease the time and expense of plant construction.  The site is zoned 
correctly for its intended purpose.  
After assessing over 30 sites throughout the middle Tennessee and southern Kentucky region, the Russellville 
site has become the preferred location for plant construction.  Factors that contributed to this include:
· Identification of in excess of 350,000 tonnes per annum of salt slag and black dross within an 
economic radius of the plant site
· The large acreage provides Alreco the opportunity to grow and assimilate planned future technology 
developments
· Government support and incentives, not only financial but also the pro-business environment in 
Logan County
· A highly skilled local workforce and availability of workers

· Availability of rail, with a high-quality rail operator
· Availability of ample electricity supplies to the property for initial and future requirements
While MHM had initially favoured a site in southern Tennessee close to two large salt slag producers, 
management made the strategic decision to locate further north.  The Russellville location remains an 
economic distance from these two secondary aluminium companies, but makes the facility less dependent on 
volumes produced by these two companies by introducing additional salt slag and black dross producers 
further north.  This strengthens MHM’s negotiating position for future contracts, with Alreco’s facility less 
reliant on any volume fluctuations from the two large producers on account of a changing business 
environment.  As most US secondary aluminium producers operate on short-term contracts, the supply of 
salt slag over the long term can fluctuate and as such it is in Alreco’s best interests to locate further north to 
access additional producers to lower supply volume risk over the long term.  
The Kentucky Economic Development Finance Authority has preliminarily approved Alreco for tax incentives 
of up to $825,000 through the Kentucky Business Investment program.  The performance-based incentive 
allows Alreco to keep a portion of its investment over the term of the agreement through corporate income 
tax credits and wage assessments by meeting job and investment targets.
The City of Russellville, Logan County and the Logan County Industrial Development Authority have approved 
a further $250,000 infrastructure grant to Alreco.  These funds will be paid against expenses incurred for 
development of site infrastructure including a rail spur, electrical transmission, water and gas lines and site 
preparation works up to the agreed $250,000 cap.
The details of the incentives were announced earlier today at a ceremony and media conference held by 
Alreco, the Ofce of the Governor of Kentucky, the Mayor of Russellville and the Logan County Judge 
Executive.  Simon Wells, executive director of MHM was in attendance and a copy of his speech follows:
Good Afternoon: Governor Beshear, Judge Chick, Mayor Stratton, distinguished guests, ladies and 
gentlemen.  It is a great pleasure to stand here before you today as we mark this significant 
development for the City of Russellville, Logan County, the Commonwealth of Kentucky and an event 
also of significance for the US aluminum industry.  
The introduction of Alreco’s aluminum by-product processing technology will be one of the most 
important developments for the US aluminum industry for decades.  Alreco’s new facility, which we 
plan to commence building in Russellville as soon as possible, will be the first US plant of its kind 
providing ‘closed-loop’ processing of aluminum salt slag and black dross, two industry by-products 
that have traditionally been disposed in landfills.
In short, what this means is that we turn a waste stream into valuable commodities with virtually no 
waste in our process.
The environmental and economic benefits of Alreco’s world-first technology will have a profoundly 
positive impact. You should expect that a large part of the US aluminum industry will be closely 
watching Alreco’s Russellville operations. This facility will be important to the entire aluminum 
industry and a jobs generator in the Commonwealth of Kentucky.
In these challenging economic times we must still strive to grow and do things better.  Better 
efciency, resourcefulness, making more with what we have.  This is central to Alreco’s approach to 
business. We have the solution to a long-standing industry problem of disposing salt slag and black 
dross in landfills. We will stop this waste and instead recover valuable commodities.
This has been the Holy Grail for the aluminum industry for decades. We are not only talking big about 
achieving this, but can point to our first plant south of Melbourne in Australia that is proving it. 
Alreco processes 100% of the salt slag produced by Australia’s aluminum industry with nothing going 
to landfill. One of our happy customers in Australia is Alcoa, the world’s largest aluminum producer.
We believe we can do the same in the United States and vastly improve industry practice. This is not 
being coerced by government regulation but being driven by industry initiative.
Alreco’s technology separates the salt cake and black dross into its individual components of 
aluminum metal, aluminum oxide, and a salt and potassium chloride blend.   All of these 
commodities have value and there are no residues or by-products that require disposal.  These

products can be used by industry saving resources, reducing energy consumption and improving the 
sustainability of the aluminum industry.
To date, Alreco has signed three supply contracts with aluminum companies that embrace our 
technology and share this vision for an end to landfill of salt cake and black dross.  There are a 
number of other companies that are also showing a keen interest with what we’re about to do at this 
site in Russellville.  
When all is said and done, I expect this facility will recycle up to 25% of the salt slag and black dross 
produced in the United States.  Alreco may build additional plants in the US in due course, as we 
aspire to a 100% target market, but this first plant here in Kentucky will be critical – this will be a US 
first, this will be the first plant in the world after our plant in Australia to prove the technology. This 
plant will be our showpiece.  This facility will set the benchmark, and show the rest of the industry 
that there is a better way. 
The other part of this operation is to not only process waste streams but also to progressively 
process landfilled salt cake and black dross to recover commodities that were previously disposed in 
landfills.  This will result in more environmental benefits, including substantially improving some 
sites that are experiencing problems with landfilled material. In Australia, Alcoa has permitted Alreco 
to reclaim a 350 million lb salt cake landfill.  The landfill will be processed over 5 years, and when 
we’re finished the site will be restored to pasture.  In the US, Alreco is assessing existing landfills in 
the region to endeavour to yield similar economic and environmental benefits.
While Alreco brings the technology, the community of Logan County and the Commonwealth of 
Kentucky are part of this enterprise with their people, skills and support industries that we will 
greatly rely on.  We look forward to a long and fruitful cooperation with the community, and the local 
and state governing bodies.
As you can no doubt sense, we are very optimistic about what we will achieve at this site. We believe 
this will be a ‘win-win-win’.  Alreco will provide aluminum producers access to a technology and 
processing that will greatly please their regulatory and community stakeholders.  The process is 
environmentally beneficial and cost competitive compared to landfill, and the community also 
prospers through the creation of direct and indirect jobs and investment.  With an anticipated 30 new 
jobs initially, there is good potential for both scale-up of operations and additional technologies that 
Alreco’s parent company has under development. 
Our executive team is based in Australia but will be regular visitors to Russellville.  Our VP of 
Operations, John Pugh will no doubt become known to you all around town as this is where he lives.  
John is from East Tennessee, so you may have trouble understanding his accent so we apologise for 
that in advance...  For further information please visit our website www.alrecousa.com.  We are 
extremely pleased with our choice in Russellville, Kentucky and look forward to working with you all.
MHM is working with engineering and environmental consultants to confirm a conservative timeframe for 
plant construction and commissioning.  The details of the analysis will be provided to the market as soon as 
available.  The anticipated processing capacity of the Russellville facility remains 200,000-250,000 tonnes 
per annum and potentially higher in due course.  The company expects to ramp up to capacity over time, with 
the installed capacity met as additional contracts are signed. MHM has budgeted US$25 million for 
construction, and expects to create at least 30 new jobs.


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From the press


Logan County plant’s technology a first for U.S. 


RUSSELLVILLE — An Australian company expects that its planned Logan County facility will reclaim about 25 percent of U.S. aluminum manufacturing waste that’s now going to landfills.

Simon Wells, executive director of MHM Metals, which will do business under the name Alreco, said production at the old ITW building on Ky. 79 should begin by the end of the first quarter of 2013.


This will be the first U.S. plant using technology proven in Australia that breaks down the waste products of aluminum manufacturing - aluminum saltcake and dross - and returns it to usable products, Wells said.


“We even expect to begin reclaiming some of those materials that have already gone to landfills,” he said.


Wells, Gov. Steve Beshear and a host of officials made the announcement Monday to a room filled with about 175 people.


Quoting an old Pointer Sisters tune, Russellville Mayor Mark Stratton said: “I’m so excited and I just can’t hide it; I’m about to lose control and I think I like it.”


Stratton and others at the announcement had good reason to be excited.


Alreco is the first new company to locate in Logan County in many years, and the 150,000-square-foot building, accompanied by more than 100 acres that Alreco is purchasing, has been vacant since 1991.


At least initially, the company will hire 30 people.


John Pugh, who will be the local plant manager, said hiring of a local management team will begin in about three months, about the same time construction is expected to begin.


“We are still working through some environmental (studies) of the property but don’t expect anything that will be a problem,” Wells said.


Production employees will be hired in early 2013, Pugh said.


The company will invest $25 million in the facility, but Wells hinted that it could consider bringing other processes to the site later.


He also predicts that the Logan County facility will draw attention from the aluminum industry as a whole and Logan County could potentially see spin-off or support industries locate here as a result.


Beshear said the announcement was so important that he wanted to spend the last day of his first term marking the occasion. Beshear was sworn in to a second term as governor during a private ceremony at midnight and was scheduled to repeat the oath publicly this afternoon.


There were many people in the crowd excited that the property will see new life, but probably none more than Ricky Thurston, who along with four others purchased the property about six years ago from ITW.


“We’ve had a couple of companies interested in the property but none followed through,” he said.


Thurston, who didn’t disclose his purchase price, said the deal ended up being a good investment for them.


State paperwork filed to get tax incentives lists the purchase price as $850,000. The company qualified for state and local wage assessment incentives for $825,000 over 10 years.


Former Logan Circuit Court Judge Bill Fuqua was at the announcement. Fuqua was on the county’s industrial board decades ago when it recruited ITW, a fastener company, to the county.


Fuqua said he hated to see the company vacate that building and several years later leave the county altogether. But he’s happy that the old building will once again be a productive part of Logan County’s industrial base.

US rolls out welcome mat for MHM Metals

IF you are offering to invest millions of dollars and provide some jobs in the US at the moment, the Americans are happy to roll out the red carpet.

Which is why Aussie company MHM Metals managed to get a standing ovation from Kentucky Governor Steve Beshear and a brace of officials this week after announcing it will buy a $25 million aluminium slag reprocessing facility in Russellville.

Even nicer than the applause was a little more than $US1 million in incentive grants with the potential for more to come as NHM starts work on a 250,000 tonne a year facility to process aluminium slag (known in the US as saltcake) and black dross.

At the moment, all of that waste material from aluminium processing goes to landfill but NHM's process, which is now working on a smaller scale in Geelong, can reprocess the waste into valuable aluminium, salt, potash and aluminium oxides.

Executive director Ben Mead said the new plant was close to no fewer than 36 aluminium processors, three of which have already signed agreements with MHM to process their waste.

Next to a railway line and on 46 hectares, the facility will have the capacity to treat around 25 per cent of all the waste produced in the US and will be cost-competitive with landfill dumping.

"There is a very pro-business environment in the US at the moment, particularly when you will provide jobs," said Ben.

"And closing the waste cycle on aluminium has always been sought by the industry, so companies like Alcoa have been tremendous supporters."

Initially, MHM was pushing a tolling model for the industry, under which the value of the products recycled in the process would be credited against processing costs.

However, a tipping model, in which MHM takes the risk of what percentages of metal and other products are in the slag, has also been popular because it is directly comparable to using landfill.

While MHM is confident in the superior efficiency of its processing and the need to adopt it as landfill becomes more difficult and expensive, it is a highly competitive business, which is why MHM has not disclosed the names or tonnages of its clients so that landfill operators can't work out which clients they are in danger of losing.

Apparently an abrupt waste lockout or significantly higher tipping fees are just one of the counter-weapons that might be used to discourage a change of business practices.

MHM shares were down more than 9 per cent yesterday on news that it will be investing some cash but it remains a speculative buy.

The company has plenty of challenges ahead but significant rewards if it can crack the US market and then move on to Canada and beyond.

November Top40

Charts

Change of Director`s Interest Notice

Director Ben Mead sold 200,000 MHM shares on market at average price of $1.07, exercised 200,000 unlisted options at 20c each and off market transfer 176,000 MHM shares at price of $1.05

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US press conference scheduling

MHM PRESS CONFERENCE SCHEDULING 
ASX Release – 18 November 2011

MHM Metals Limited (ASX:MHM) is pleased to announce that a US press conference has been scheduled for 
Monday 12 December at 1.00pm (CST).  The location of the press conference will be announced approximately 
48 hours prior to the scheduled event.


The press conference will be held together with senior state and local government officials and a representative 
from the MHM Board of Directors.  The event has been scheduled to outline government grants and incentives 
that are expected to be formally approved prior to this time, together with information regarding MHM’s
property acquisition for construction of the first US salt slag and black dross recycling facility.


Details of the press conference will be released to the ASX prior to the commencement of trading on Tuesday 13 
December, and an Australian press event is also scheduled in Melbourne later that day.

Third US Processing Contract

THIRD US PROCESSING CONTRACT 
ASX Release – 14 November 2011

MHM Metals Limited (ASX:MHM) has secured a third processing contract for the supply of feedstock to the planned US salt slag and black dross processing facility. The twelve month contract has been structured as a ‘tipping’ arrangement, where MHM assumes ownership of recovered aluminium, salt flux and aluminium oxide.  The contract provides a mechanism for the parties to explore a tolling arrangement where the customer retains ownership of recovered aluminium and salt flux, on the basis of demonstrated recoveries.
Following MHM’s announcement of the first and second supply contracts earlier this month, momentum continues to grow for MHM as the company rapidly progresses the global expansion of its aluminium waste recycling technology.  


Due to the dynamics of the US aluminium industry, the details of this contract must remain confidential and 
MHM must refrain from revealing the counterparty or contract terms.  Subsequent companies that engage contractually with MHM may also require contract information and company names to remain confidential prior to commencement of MHM’s US operations.  A number of US aluminium companies accepting the MHM solution may experience reduced or denied landfill access or large landfill cost increases if identified as contracting with MHM.  This is particularly problematic in the period between contracting for waste recycling and commencement of MHM’s operations.


Due to contractual limitations MHM also cannot reveal tonnages to be processed. The anticipated processing capacity of the first US plant remains 200,000-250,000 tonnes per annum. MHM intends to later provide overall contracted supply volumes when it can be done so in a manner that provides no risk for identification of the underlying counterparties.


MHM continues to engage with a number of other companies with substantial salt slag and black dross volumes and management is working diligently to secure additional processing contracts in the near future. Site due diligence continues to progress extremely well.  Once government financial support for the project has been confirmed over the coming weeks, management has identified no reason why the acquisition of the property would not proceed.  MHM has commenced geotechnical analysis of the site, which is not expected to 
identify any issues.  The company has also engaged with a rail provider and commenced preliminary planning and engineering for construction of a rail spur.  The availability of rail is an important consideration for MHM, providing flexibility of transportation and potentially increasing the radius for which salt slag and black dross can be economically recycled.  MHM has also commenced planning adaption of existing structures on the propertythat show potential for reduced cost and expedited construction timeframes.


Link

Features - Legislation & Regulations WASTE REDEFINED

The U.S. Environmental Protection Agency (EPA) has developed a new definition of solid waste under the Resource Conservation and Recovery Act (RCRA) designed to encourage recycling and to streamline regulation of reclaimed hazardous secondary materials. The EPA says it believes the streamlined regulations, which will affect about 5,000 facilities, will make recycling safer, easier and more cost effective.

Rule DevelopmentTo develop the new rules, the EPA studied current industry best management practices for the recycling of hazardous secondary materials and the environmental problems associated with recycling. The EPA also conducted an economic study of incentives and disincentives for recycling before publishing the rule. The EPA initially proposed its new rules in 2007.

State environmental agencies were generally supportive, as was industry; however, certain environmental groups opposed it. The Sierra Club appealed the rulemaking, and the EPA published its revised rule July 6, 2011, committing to promulgate a final rule by Dec. 31, 2011. The EPA says it believes the revised rule will improve accountability and oversight of hazardous materials recycling while allowing for important flexibility that will promote its economic and environmental benefits.

Rule MechanicsThe rule encourages recycling by excluding or exempting certain hazardous secondary materials from the definition of solid waste under RCRA, which takes the materials out of the often burdensome RCRA regime of handling and disposal restrictions and recordkeeping requirements.

"Hazardous secondary materials" are eligible for treatment under the rule, which means secondary materials (e.g., any spent material, byproduct or sludge) that, when discarded, would be identified as hazardous waste under RCRA. A generator cannot use the rule for materials recycled by a use constituting disposal or burned for energy recovery, for inherently waste-like materials, for materials already excluded from the definition of solid waste under some other exemption or for spent lead acid batteries or spent petroleum catalysts.

The rule includes four separate exclusions or exemptions from the definition of solid waste:

• Under control of the generator;
• Transfer based;
• Nonwaste determination; and
• Legitimate recycling.

We will take a closer look at each of these exclusions.

...More

Link

From the press

US first for MHM Metals’ aluminium technology


November 09, 2011 by Editorial Staff

Australia / United States: MHM Metals of Australia has reached a milestone in the development of its aluminium waste recycling technology by securing a contract for the supply of feedstock to its first US salt slag and black dross processing facility.

The company’s first overseas contract is for five years and has been structured as a tolling arrangement where a fixed price per tonne is charged to the customer, with MHM returning aluminium and flux to the client while retaining ownership of recovered aluminium oxide. The contract is subject to a satisfactory visit by the US aluminium company to MHM’s Australian operations.

Under the agreement, MHM is not allowed to reveal the name of the counterparty, the contract terms or the tonnages to be processed, but completion of this contract provides sufficient volume to begin with construction of the US plant, which will have a throughput of 200 000-250 000 tonnes per annum. The company is continuing to engage with a number of other firms with substantial salt slag and black dross volumes and aims to secure additional processing contracts in the near future.

Black dross is a by-product from reverberatory furnace operations and has a similar composition to salt slag - although often with a higher aluminium content. MHM recently appointed John Pugh as Director of Operations, North America, which subsequently led the company to investigate black dross recycling opportunities. The company says that black dross recycling could be a potentially substantial additional revenue generator, with minimal investment of extra resources as the recycling of salt slag and black dross go hand in hand.

Link

MHM METALS LTD. LANDS FIRST CONTRACT IN U.S.

11/7/2011

Australian company structures contract as tolling arrangement.

MHM Metals Ltd., based in Australia, has landed its first overseas processing contract for the supply of feedstock to MHM’s first U.S. salt slag and black dross processing facility. The five-year contract has been structured as a tolling arrangement, where a fixed price per metric ton is charged to the customer with MHM returning aluminum and flux to the customer while retaining ownership of recovered aluminum oxide.

MHM adds that details of the contract will remain confidential, and the company did not divulge either the counterparty or contract terms.

MHM's core business is associated with waste recycling technologies in the aluminum industry, with operations in both Australia and the United States.

According to MHM, the completion of the contract will provide enough volume for it to commence with U.S. plant construction. There will likely be a number of confidential contracts entered on these terms, and MHM intends to provide overall contracted supply volumes. The anticipated throughput of its first U.S. plant remains between 200,000-250,000 metric tons per year.

MHM continues to engage with a number of other companies with substantial salt slag and black dross volumes and management is working diligently to secure additional processing contracts in the near future.

Link

ADDITIONAL US PROCESSING CONTRACT

ADDITIONAL US PROCESSING CONTRACT 
ASX Release – 10 November 2011

MHM Metals Limited (ASX:MHM) has secured an additional processing contract for the supply of feedstock to the planned US salt slag and black dross processing facility. The twelve month contract has been structured as a ‘tipping’ arrangement, where MHM assumes ownership of recovered aluminium, salt flux and aluminium oxide.  The contract provides a mechanism for the parties to explore a tolling arrangement where the customer retains ownership of recovered aluminium and salt flux, on the basis of demonstrated recoveries.


Following MHM’s announcement of the first supply contract on 4 November, this additional contract is an 
immensely positive development for MHM, demonstrating continued progression in the global expansion of the company’s aluminium waste recycling technology.  


Due to the dynamics of the US aluminium industry, the details of this contract must remain confidential and 
MHM must refrain from revealing the counterparty or contract terms.  


Subsequent companies that engage contractually with MHM may also require contract information and 
company names to remain confidential prior to commencement of MHM’s US operations.  A number of US 
aluminium companies accepting the MHM solution may experience reduced or denied landfill access or large 
landfill cost increases if identified as contracting with MHM.  This is particularly problematic in the period 
between contracting for waste recycling and commencement of MHM’s operations.


Due to contractual limitations MHM also cannot reveal tonnages to be processed. MHM intends to later provide overall contracted supply volumes when it can be done so in a manner that provides no risk for identification of the underlying counterparties.  The anticipated processing capacity of the first US plant remains 200,000-250,000 tonnes per annum.  


MHM continues to engage with a number of other companies with substantial salt slag and black dross volumes and management is working diligently to secure additional processing contracts in the near future.Site due diligence continues to progress well, and MHM remains on track to complete the land acquisition at the end of January subject to finalisation of government incentives and concluding environmental due diligence.  


Phase one of the environmental study of the property has not identified any issues of concern, and the testing is being conducted as part of a standard approach applied with any US property acquisition.  


MHM is working to finalise the date for a press conference, anticipated to be held together with senior government officials, during which details of the property purchase and availability of government incentives and support for the project will be released.  Whilst the government incentives must be formally approved, MHM remains confident that the environmental and economic benefits of MHM’s business, and the positive impacts upon the sustainability of the aluminium industry, will herald significant support from government.  
MHM hopes to conduct this press conference as soon as possible, in the coming weeks


Link

Aluminum Dross: a hazard to your health and the environment

Aluminum Dross: a hazard to your health and the environment What is aluminum dross? Aluminum dross is the “residual waste material produced during an aluminum melting process,” (Environmental Chemistry) and it poses a risk to people and the environment. Approximately “five millions tons of aluminum dross are produced per year in the United States.” (University of Kentucky Law) There are two primary types of aluminum dross: black and white. Black dross, also known as dry dross, has a granular texture. It tends to have a low metal content and a high concentration of salts and oxides. White dross, which is wet, has high concentrations of metal and a smaller amount of salts and oxides. What is aluminum dross used for? The reason why aluminum dross is produced in such high quantities in the United States is because aluminum is a material commonly utilized in the production of a number of products including “pistons, engine and body parts for cars, beverage cans, doors, siding and aluminum foil.” (University of Kentucky Law) The Environmental Protection Agency (EPA) is working closely with “the aluminum industry, waste industry, and the states of Ohio and Indiana on a research project focused on safe management of aluminum productions wastes.” (EPA) All have expressed varying degrees of concerns “about the management of secondary aluminum wastes,” which are the cause of “fires, odors, elevated operating temperatures, engineered component failures and leachate releases at some municipal solid waste landfills.” (EPA) What are the potential dangers of Aluminum dross? -Dross is highly flammable when in contact with water. -Dross is a skin and eye irritant. If a person gets the substance on their skin, it is strongly advised that they wash it off immediately. If they get dross in their eyes, they are advised to flush out the substance “for at least twenty minutes.” (Chemical Dictionary Online) -Dross emits toxic chemicals and gases into the atmosphere, such as ammonia. Workers handling the dross are usually provided with breathing apparatuses, which filter out the fumes, but people living or working near sites of aluminum dross production are especially vulnerable, especially if they already suffer from a respiratory condition such as asthma. -More serious medical conditions associated with aluminum dross exposure include “cancer, liver damage, skin rashes and reproductive disorders.” (University of Kentucky College of Law) -When deposited and stored in landfills, dross is hazardous to the environment. When dumped in landfills, aluminum dross emits foul, often toxic odors. -Every year “there are approximately 8,300 fires that occur in landfills, (University of Kentucky College of Law),” many of which contain highly flammable aluminum dross products.

Interesting facts about aluminium

FIRST US PROCESSING CONTRACT

FIRST US PROCESSING CONTRACT 
ASX Release – 4 November 2011


MHM Metals Limited (ASX:MHM) has secured its first overseas processing contract for the supply of feedstock 
to MHM’s first US salt slag and black dross processing facility. The five year contract has been structured as a 
tolling arrangement, where a fixed price per tonne is charged to the customer with MHM returning aluminium 
and flux to the customer while retaining ownership of recovered aluminium oxide.


This is a significant development for MHM, marking a milestone in the global expansion of the company’s 
aluminium waste recycling technology.


Due to the dynamics of the US aluminium industry, the details of the contract must remain confidential and 
MHM must refrain from revealing the counterparty or contract terms.  


Further companies that engage contractually with MHM will likely also require contract information and 
company names to remain confidential prior to commencement of operations at MHM’s first US plant.  A 
number of US aluminium companies accepting the MHM solution may experience reduced or denied landfill 
access or large landfill cost increases if identified as contracting with MHM.  This is particularly problematic in 
the period between contracting for waste recycling and commencement of MHM’s operations.


Due to contractual limitations MHM also cannot reveal tonnages to be processed.  However the completion of 
this contract provides sufficient volume for MHM to commence with US plant construction.  There will likely be a 
number of confidential contracts entered on these terms and MHM intends to later provide overall contracted 
supply volumes.  The anticipated throughput of the first US plant remains 200,000-250,000 tonnes per annum.


This supply contract is subject to a satisfactory visit by the US aluminium company to MHM’s Australian 
operations in the near future.  The contract also contains clauses that permit the contract counterparty to 
cancel the contract should information as to its identity become public prior to commencement of MHM’s US 
operations.


MHM continues to engage with a number of other companies with substantial salt slag and black dross 
volumes and management is working diligently to secure additional processing contracts in the near future.

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My thoughts only

This is probably how much our AL80 worth per tonne. (Only guesswork)

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From 2010 Annual report page 9

Gross Revenue: $2,735,528
Net profit: $1,008,021
Once off landfill cost: $545,829
Total plant throughput: 13,627 tonnes from Alcoa and Sims

So the actual net profit if landfill didn't happen is
$1,553,850 or ($114.03/t) and actual cost of production is $1,181,678 or ($86.72/t)

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From 2011 Annual report page 6

When Geelong plant operates at full capacity, it is expected to process 35,000t of landfill salt slag and 24,000t of salt slag and dross from Alcoa and Sims.

Recovered products 

based on 35,000t of salt slag MHM can recover
3,500t of aluminium
14,000t of AL80
17,500t of salt&potassium 

based on 24,000t of salt slag/dross MHM can recover
9,600t of AL80

Revenues/EBIT/Cost

Now assume MHM can sell aluminium at $2,000/t and AL80 at $P per tonne.

As we know that no revenue from AL80 in FY2010, so we can assume the net profit per tonne for processing the material for Alcoa and Sims is about $114.03.

1. Alcoa/Sims
Then based on 24,000t

24,000t x 114.03/t = $2,736,720 (pre-tax profit to MHM)

revenue or net profit from AL80
9,600t x $p/t x 60% = $5,760 x p

2. Landfill

Now, the salt slag from landfill.
cost of production on 35,000t of salt slag
35,000t x -$86.72/t = -$3,034,500
But Alreco only received 60% EBIT therefore the cost should be 60% of -$3,034,500 = -$1,820,700

revenue or net profit from aluminium and AL80
3,500t x $2,000/t x 60% = $4,200,000
14,000t x $p/t x 60% = $8,400p

salt/potash maybe worth $200/t
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Now, MHM has said Geelong plant expect to earn $8.6m pre-tax profit once operate in full capacity. If I sum up all the components above.

($2,736,720 + 5,760p) + ($4,200,000 + $8,400p) - $1,820,700 should equal to $8,600,000.

Then I guess in MHM's valuation they have assumed  AL80 valued at $246.43ish /t

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Note: the cost of production per tonne may not be accurate, for example on September 2011 quarter total throughput is 5,540t but cost of production is $990,000 which works out to be $178.7/t

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In conclusion,

to value MHM's first US plant we can use these figures

tolling profit: ~1.33 x $100 = $133 (100% profit in oversea operation)
Al80 price per tonne: ~$246

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