welcome to a scrap life a podcast solely focused on the hustlers Grinders operators and business owners who live and breathe the scrap metal industry every day here is your host Brett eard so I’m sitting here with Nick mccan Al steel we’re in between kind of in between sessions at least I think there’s another session going on right now um at the fast Market uh Scrap and Steel conference this is my first time ever at this conference have you attended this specific conference before Nick I think this is uh I’ve been to a couple of other fast Market events but I think this is actually the first time that I’ve been to the the steel and scrap one uh I’m still relatively new in the industry I’ve only been with ala for uh just coming up in two and a half years now okay um so uh yeah you know new to the industry new to these type of events haven’t actually been in Houston for about 14 years I think so really yeah it’s been a it’s been a while since i’ since I’ve been down here what brought you to the dark side

what brought you scrap in the steel side how do you go what were you doing before before this yeah so I’ve I’ve spent my career basically um as a procurement guy and a logistician in a series of capital intensive spaces okay um I was in mining specifically gold mining um for a number of years sort of working working globally on that um I then transitioned into the cement space uh and I was working in cement uh materials Aggregates uh and um kind of I don’t know I was you know pandemic we were kind of got bored sitting at home I I don’t really sure sure what it was but I I felt felt like a change was change another change was coming another change was needed yeah um and uh the opportunity with ala came up to to join the team and and be part of uh be part of this sort of green steel EF transformation um very much sort of happening in my backyard in Ontario and there’s not there’s not you know you know these these sort of big mega mega projects they don’t come along often in your career um

anywhere they don’t they especially don’t come along often sort of at home right your back and so to be able to do that uh close to home and I you know I still travel I still live in Toronto and I work 800 kilometers North in in in s St Marie Ontario yeah um but uh so a little bit of you know a little bit of Lifestyle in terms of an a bit of an easier travel schedule um but also just a chance to be um to be part of this big you know transformational project for the company and and for the industry in in Canada at the end of the day so before we get into the project procurement on your guys’s end when you’re talking about from the steel mills perspective yeah I mean that’s your guys’s ability to provide the inputs I would scrap recycle material whatever you want whatever the term of the is going to be moving forward but it’s your it’s your ability to find the material to supply your new furnace that ala just is installed right with enough material to feed it on an efficient basis I

mean is that yeah so I mean so so today I mean my you know my today’s your big task today my task is is is keeping the blast furnace running right you know that that’s that’s the Tas today right go out and secure enough iron ore enough COC and coal in the market enough limestone get it there um you know to be to be able to be able to run the blast furnace right now yeah um you know I also look after all the services um the cfex for the the project is is part of my team as well down to the nuts and the bolts and the M spares to keep to keep the Mills running right um going forwards that’s going to that is going to transition significantly and um it will you know will eventually become a 100% scrap based operation with you know a portion of and virgin metallics and and whether that’s you know whether that’s pig iron or whether that’s you know H hbi Dr we’re you know we’re a few years away from that um but I think that piece of the role you know not only

are we building this this big construction project right now um we’re also fundamentally reorientating the inbound supply chain Network yeah um because what you look at know what we have today is we have a couple of iron oil suppliers right and that’s that’s you know that’s basically all you know vessel vessel based Marine based material that’s moving in in you know 10,000 ton lot is how many tons a month is that currently roughly speaking um so because of where we are on the Lakes we have a essentially a 9 Monon shipping season okay um you know so we’re bringing in you know well in like total number of of of you know total amount of of product um you know would be upwards of of of five or six million tons of of all raw materials but most of it coming In by vessel right and most of it coming in from you know a couple of mine locations or a couple of uh you know a couple of uh Port locations in terms of coal uh whereas when we look at you know shifting to the the scrap world it’s going to

be a much more distributed supply network much more diverse much more diverse suppor and and a and a more uh a more varied uh a more varied Transportation approach as well okay now we’ll be about 70% rail based okay because the eaf is designed to be rail fed yeah uh but we’ll have you know significant volumes of of scrap coming in by by water um and and you know fairly significant volumes coming in by truck when compared to today and even though that’s will be you know be relatively local sort of 300 you know 300 I’ll keep I’ll stay in metric because that’s how my mind works right but you know we sort of 3 400 kilometer type radius for the for the truck trff I mean how many how many tons are you anticipating having to buy from the market um to feed this this new meal that you guys are putting in yeah so it’s it’s it’s it’s a ramp up right in terms of in terms of how we look at it and so but at like say like at full capacity when you guys really feel like you’re so at

capacity you know full full capacity which is you know which is you know all our P we have all our power um and and sort of you know name name plate of of the AF um you know we’re looking at you know the opportunity to produce 3 million tons a year finished right um now to do that in terms of you know how much how much scrap slightly depends it’s SL well it is does depend on what you decide in terms of metalurgy of your finished products right and how much virgin content you need in that finished product particularly to get your Copp where it needs to be right for sure um so you know it and and it also depends on you know do we end up with a hbi mix or a a pig iron mix um on that you know in in that that final Blend but it could be you know let’s say it could be as much as you it could be as much as 3 million tons a year of scrap so when you pop the gates at that at that final final number right okay so when

you pop the gates in the beginning of your ramp up period it’s probably going to be a uh and I assume like so I I’ll I’ll back up a little bit yeah sure so what is the anticipated timeline for you guys to start receiving uh recycled materials scrap metal HMS one and two so so you know today we run a you know we run a traditional basic auction furnace um we’re anywhere between 15 to 20% scrap okay on on that right so you I’d say we have you know we have a a a strong Supply base of you know existing um and we’ve been in the market for you know for a number of years anywhere between 10 and you know 20,000 okay yeah of that of that sort of number um you know right now the plan is to complete construction at the end of this year oh well um and then ramp up you know ramp ramp up begins um and you know we are essentially with that with that 20 end of 24 that 25 ramp up we’re still going to stay around that 2.4 million tons a year

right finish finish deel um and it’ll be a it’ll be kind of a cut over right so the EFS will do more um we’ll still be running the blast furnace we’ll be using hot metal from from the blast furnace the BFS basic oygen furnaces will ramp down will then switch to uh eaf production with a mix of scrap and and hot metal uh and then eventually you know sometime between 25 and 30 um will then have the opportunity to be you know 100% eaf And 100% cold charge at that at that 3 million ton number so what was the I mean I just out of curiosity and if you don’t know the answer I mean that’s fine but what was the kind of the big shift that that I mean that’s a that’s not a a it’s not a small investment B that’s a big move to say okay we’re going to go from BF to to yeah now we’re going to go to eaf and what was the mindset what was the thought process I mean I’m sure there happens on many fronts on many levels but I mean is it just to

be I’m not even going to Let’s I’m just let you answer like what what is that what was it so I I think like many of these big big strategic citizens right they are the function of um you know internal factors external factors things you can control things you can’t control yes um you know ultimately I guess if you look at it from a big picture perspective uh we’re approaching the end of life for the Bloss furnace okay right so we are coming up to a Bloss furnace reine BL furnace rebuild uh which is not a insignificant capital investment for any any steel for the just for the Layman’s like terms like for the guys out there that don’t understand yeah what is just a range what is a cost you say it’s not it’s not a small investment yeah it’s not a small investment so I I mean it’s interesting right because we ran these numbers pre-co when they were probably actually significantly lower than than than than they are today but I think you know two to 300 million wow would be you know of of the order right um so

there’s that which is a you know just that’s just like a structural reality of of the operation um you know we’ve also got a uh price on carbon in Canada um that price is increasing over time uh so you know this year 2024 the price is $65 a ton um it will increase to $150 a ton by 2030 um so the price of carbon is definitely influencing investment decisions absolutely in Canada right absolutely um and everywhere I think for that matter I mean it’s not just Canada I mean it’s people are taking that into consideration on I mean on many levels in many countries um Canada definitely on the more aggressive side but but absolutely yeah so I think you know that was again that was a significant factor right in our decision um to to to make to make that investment in in the AF uh you know I’d say in Canada also you know industry is is you know moving faster right than many other countries with these major decarbonization decisions MH we’re we’re slightly lucky I guess you could say in Ontario that because we have a lot of nuclear capacity

we have a lot of nuclear Basel load in the grid that um the the the you know the average grid output if you want to sort of you know you can measure it you measure it in the peak so you can kind of measure it as the the average um about 90% of that energy would be considered sort of low emissions right so it be you know be a very be a relatively low low footprint um and we have on a global standard I would say we have competitive we have competitive electricity pricing as as well in Ontario so so we have location was good so yes we have a low carbon grid um we have a uh a reasonable price yeah um and we have some policy factors that are some increasing like on the side pressing right um so I think those are all um you know those are all those are all significant um you know we do you know we do have um you know some some Port but I think you know it’s it’s it’s important to recognize that just like just this one project meets 100% of the

provincial Target for CO2 reduction wow that’s that’s how you know switching off you know switching to EF is is is basically meeting you know the the provincial 2030 Target for for Ontario and mean it five years ahead of schedule right I mean roughly yeah I mean we we know we we recognize there’s a cut of a period right so so it’s not you know four years yeah you’re still ahead yeah hopefully ahead of schedule yeah and so which means you guys are you know you’re you’re thinking like not just financially what makes the most sense but also trying to get ahead of of a bunch of of things that are that are coming down the line and for sure that makes sense yeah so I mean what are the similarities when you talk about when you’re in procurement for a cement um plant or mining operations how does that like what are the Crossovers and then what are the differences is that you see between the two I mean is are they very similar in in their function I mean just it’s maybe I’ll just answer that question first of all just from from

an energy standpoint because I think I think it is interesting and and one of the things that the cement space is grappling with is is decarbonization as well right um some progress has been made mostly by moving from coal to natural gas which is a slightly better footprint um but the big biggest challenge that the cement industry has is the process emissions right the the fact that you’re creating the cement you’re driving the CO2 out of limestone yeah right so you have a you have a structural emissions challenge there in uh in the cement industry which is very difficult to um it’s a work it’s a tough work around which it’s very difficult to mitigate that unless you sequester it basically right that’s that’s sort of that’s sort of your option so so one of the things that you know we were sort of acutely aware of in the cement space was you know from a procur perspective the sort of limited opportunity to reduce the footprint the the CO2 footprint of the energy Supply right it could you know you can put in a more efficient kilm maybe uses less natural gas you

can switch from colder natural gas um laterally there was a lot of not laterally so much but there’s a lot of um a lot of work being done around alternative fuels so can you burn solvents can you go on waste oil you go on tires things that otherwise might end up in otherwise landfill or just be incin ated with kind of no use for the energy um from a sort of more standard procurement perspective I I think the the big the big difference I the big difference with with with the steel industry is um you know you make very big commitments in terms of those input costs around around ore and coal yeah um certainly one of the benefits just in terms of the finan Cal dynamics of an EF is that your input costs are going to more closely track with your steel price yeah right so you know the expectation is your steel price goes up well you know scrap going to go up as well um steel price goes down scrap costs are going to go down right so um you should be you know the you if you look at

the the the the financial profile of of the eaf producers that are out there today tends to be more stable earnings do you guys I mean anticipate bringing in um a large percentage of your material still by um import do do you feel like you can capture a good chunk of your of your procurement needs within within Canada I mean how how far do you think you’re going to have to reach it was it it was certainly that was a a very critical um very critical piece of the puzzle for us in terms of sort of Designing you know designing the future operating model um so one of the things we’ve done is we’ve we’ve put together a joint venture with Triple M medals okay um so we essentially have a you know a joint venture entity uh with with those guys they are you know very have a very significant scrap metal presence in in Ontario um and and a you know excellent presence also in in the US uh and have really brought a lot of knowledge to the table in terms of you know their ability to help us understand the

market help us understand what the what the supply base um looks like um we are serviced in s St Marie by both the CN coming from actually coming from the the upper peninsul of Michigan um and by the CP coming from Southern Ontario okay so we have quite a good ability to bring in scrap sort of from both sides of the Lakes right to bring it up um you know bring it up through uh you know Illinois um Minnesota Michigan Detroit onio and the of the Lakes into into S as well as as well as bringing it in from western Canada or a little further west in the US um so the market focus is certainly the the great lakes in terms of you know primary Supply um and we have good confidence that you know the material is there that the the material is available uh certainly as we look you know we look through our our kind of phase phase one ramp up ramp up period I think over time the expectation is yes we will have to draw in from you know from from further a field but if you look

at just the Dynamics of the scrap Market in Ontario today there’s a very significant tonnage that leaves the province um that leaves either um to Quebec and to Quebec actually leaves to Quebec and is and then exported um or product that leaves in into the US so there is a there is a good balance of material even even just in Ontario that’s that’s leaving the province today well it sounds like you guys have the ability um to lean on your relationship with Triple M too and from a procurement side from a from a scrap side and and be able to kind of attack it with a quote unquote partner that can kind of help has already developed that side of the business and so will you guys be buying I mean will you will all purchase purchasing on the scrap site come through Triple M or will it be kind of a tag team type of so it will come um it will basically come through the JP is is the way to look at it right so um we will obviously we will buy some you know product from Triple M directly and

from their yards and mean you’re Prim use that we’re going to our approach to the market is going to be as as as the joint venture um and so it’s very clear that you know when people are selling they’re selling to they’re sell to AA right in the in the form of the JV um they’re not selling through you know just just sort of all through triple right yeah yeah so give me a little background on Aloma I mean um for those that that I mean in my even in my my neck of the woods like my my world I’m not super familiar with alom so let’s give me a little bit of uh just kind of background on Aloma what you guys are about and and you know usually I open up with that but you just have such an interesting I mean I mean not very there’s not very many people that go out and and and are making that type of commitment on the eaf site like right now and in such a big way so yeah I mean there’s got to be a lot of history there yeah I mean

so it’s it’s uh it’s definitely uh it’s a you know it’s it’s sort of an interesting story I guess of uh you know a little bit of of of you know looking at I guess the Canadian you know the Canadian World it all you know at that point you know sort of that you know that bit of the Great Lakes and and really the economic development of of that bit of the Great Lakes in the early in the late sorry 19th century turn of turn of the 20th century when you know Railways were being built and all bodies were being discovered yeah um and you know frankly the the you know the location was kind of looked at in terms of the logistical benefits um but also being somewhat speculative so there was you know there was an early hydroelectric station that was built on the the US side in in Su Michigan um so there was power right and then it was really a question of like well where’s the IR or right there’s there’s ion or on on the upper peninsula uh so there’s you know so there’s ion or close by

there there was ion or actually I guess sorry I should take a step back from that actually there was I or um in Ontario know at at a mine north of north of where we are today which was which was which was rail you know basically on rail served um obviously the the you know the development of the uh the the medals in in Sudbury around sort of nickel and and and zinc in in subury was kind of another sort of adjacent support to the um the early you know the early Foundation of of of the bill uh but really I think being on you know being on the water um being close to you know sources of of material in a way that the you know the mills in Southern Ontario were not were not really right um so that was you know that was really the the the the foundation of it um which has started in like you said the early 19s right so 120 years 120 years of of History um and and it’s you know I think one of the really interesting things about you know sort of the

the Algoma story is is the you know the relationship with the town the relationship with the surroundings you know everyone everyone knows someone who works there or had a family member who worked there we’ve got fourth and fifth generation employees that’s awesome um you know and I think one of the nice things about you know the the investment in thef is is the ability to continue you know to continue that Legacy and six and seven yeah right um yeah so that’s you know that’s owned is it a publicly traded so so we’re public so we’re publicly traded they we’re public traded um listed uh primary listing is on the the the tronto stock exchange okay yeah and has it was it I mean how long has it been a publicly um so we so we relisted in uh came back onto the markets in 21 okay um previous to that we were privately held by uh esss steel the the Indian uh multinational Steel company uh they bought they bought the company um back in the mid 000s this is probably going to need some editing because I yeah that’s fine no you’re good

my dates maybe wrong um but the company had been you know Public public prior that I me there’s been a few you know there’s there’s there’s been a there’s been a cycle right um like a lot of you know like like a lot of these bills I guess I think the interesting thing going from say I mean the the scrap recycled materials industry is such a relationship driven industry right I mean it’s as much as all of us would love to say like two suppliers could Supply everything we need right it’s it’s it’s such a it’s a collective of rail cars and trucks and you know and this and that and this supplier and so I think that from my perspective I feel like if that’s like a I mean you’ll enjoy that part of it I mean how much of that you’re involved in or not I don’t know but I mean probably the pricing and understanding the the input side of it there’s probably more but I feel like there’s there’s so much of that that that this industry is like it’s kind of in our blood is is developing those relationships

so I mean I think you guys are doing the right thing by showing up at these conferences and saying hey like like if there’s you know yeah and I think that’s one of the things that that the partnership with with Triple M has has has really brought to the table that you know their knowledge of the industry that their relationships um with with you know with peers who are big um but also with you know with smaller guys in in in in smaller markets uh to be able to go and say you know we’d like you to be you know we’d like you to be part of this and this is how we structure it um whereas it be very very difficult for us to do that on our own yeah no I mean that’s what it’s about and I think that’s even like you guys recognize the relationship component right out the gate like we are going to need someone with those relationship deep ties in the industry to for this to be a success and I think that’s I mean that speaks to you guys thinking ahead it speaks to Triple M

and you know their you know their capacity and their abilities I mean so I feel like that’s a mean it only makes sense to me so I I’ll I’ll end this on with one last question but I mean what have you found the the most interesting exciting you could put that’s that’s from transferring from say Mining and cement to now steel and scrap is there anything that stands out that’s just and there’s there’s a couple thing I mean I’m I’ve always been a Planes Trains and Automobiles guy right so I to me like the just like the variety right in terms of the materials movement side I just find I just find it fascinating I find like endless like endlessly interesting right meeting with the shippers Mee the rail guys figuring out how we’re going to get product from A to B what’s the best way to do it you know how fastest cheapest you know most efficient right that that side of it um and it’s it’s all you know it’s it’s it’s a constantly sort of changing landscape right of of you know where can we get material at a good at

a good price and how can we move it at a at a sensible cost right yeah um and then and then I mean the other P I just think is um I I think is sort of um at least to me enjoyable is just the the the production is um you know watching just watching you know watching the process right like you know watching the the blast furnace getting tapped watching that liquid you know liquid iron coming out watching the pull from the steel you know the steel L happening seeing that you know seeing the seeing the the hot you know the hot steel go you go go go through the mill um it’s I think it’s to me what’s I think so so interesting about that is that as much technology as there is in modal steel making um you know you could still take someone from 100 years ago and they’d be they’d be overwhelmed by the scale but fundamentally they have a really good understanding of still a lot one thing I will like add on to that is there’s still a lot of art to the science like in the

on the steel making side like you said fundamentally they would understand the process because there is still an art form to making that blend making that cake and and having it come out so I mean I as another as a Planes Trains and auto automobiles guy myself like I I love just the grittiness of it and the what it takes to actually get stuff from A to B but also not just a to B but to change its form and and make new steel I mean it’s it’s it’s an awesome process so thank you for taking the time and I appreciate it and I’m looking forward to the rest of the conference and we’ll see you around here really really great to meet you Brett and absolutely yeah really enjoyed the conversation thank you sir this one