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.
Link
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.
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