FREMONT, Neb. — As tractor-trailers full of scrap material stream in and out of the metal recycling facility here, a pair of diesel-fueled material handlers use claws to pick metal and crushed vehicles from 30-foot-high scrap piles.
They feed a matte black machine — now the centerpiece of the 32-acre facility — that can swallow a pickup whole. When a conveyor belt brings it out the other end a couple of minutes later, it's unrecognizable: “Picture this: a car goes into the mill hole at the top and when it comes out, it's in pieces that are fist-sized or smaller,” said Kevin Yount, president at All Metals Market.
Business at All Metals Market is strong and about to get stronger now that a new automobile shredder is on line. The $2.4 million, Italian-made hammer mill machine is responsible for seven new employees and a new profit center for the second-generation metal recycling facility. Its electricity use is also expected to generate some revenue for the Omaha Public Power District.
Before, the facility had to sell scrap vehicles to larger, more capable recyclers in the region. The Bonfiglioli-manufactured shredder means All Metals Market can now produce up to 30 tons of scrap iron an hour in its own backyard.
“Basically, we wanted to take care of our scrap tonnage more effectively and efficiently,” said Todd Hoppe, facility manager.
Considering steel giant Nucor Corp. operates three steel mills northwest of Fremont in Norfolk, the shuddering of steel being ripped apart might as well be the sound of a cash register opening. Nucor buys most of All Metals Market's scrap containing iron, also known as ferrous scrap metal, Yount said.
Charlotte, N.C.-based Nucor is the self-billed largest recycler on the continent and reported recycling 19.2 million tons of scrap steel in 2012. By comparison, U.S. recyclers processed 75.2 million metric tons of iron and steel in 2012, according to the Institute of Scrap Recycling Industries Inc.
Unlike competitors that use coal-fired blast furnaces to remove molten iron from ore, Nucor uses electric arc furnaces and relies on recycled scrap iron to produce its steel. The average electric arc furnace operator incurs 70 percent to 80 percent of operating costs on procuring scrap ferrous metals, according to Andrew Lane, an equity research analyst at Morningstar Inc.
“For Nucor, far and away the largest producer of steel via electric arc furnace in the U.S., the price of ferrous scrap metal is particularly important to per-unit operating costs,” Lane said.
Different grades command different prices, which can vary considerably, but Nucor paid an average of $372 per ton of scrap or scrap substitute during the third quarter of 2013, according to a filing in November.
U.S. Department of Labor data show healthy employment gains in the domestic steel industry since the recession, but gains in scrap recycling have been even higher.
The most recent data from Institute of Scrap Recycling Industries showed the domestic scrap recycling industry employment grew 29 percent to almost 138,000 jobs between 2010 and 2012. Yount echoed the trend this year, growing his employee base almost 18 percent to 47.
But it's unlikely the new shredder will reduce the volume of junk cars in the region. Competitors in places like Kearney, Neb., Sioux City, Iowa, and Council Bluffs also operate shredders, and the model in operation at All Metals Market was specifically chosen because of its smaller capacity and relative affordability.
Large shredders cost from $5 million to $10 million. Hoppe said there's virtually no domestic equivalent to his firm's Italian-made system.
He declined to say for how much the firm sold scrap metal to Nucor, or the price of vehicles it used to sell to larger recycling processors. But recyclers, like steel mills, pay for material by the ton.
Josh Raess, sales manager at U-Pull-It of Omaha, said tonnage for junk cars it sells to recyclers has fluctuated from a low of $100 per ton to a high of around $350 per ton over the last five years. He said the price is currently around $225 per ton.
U-Pull-It sells individual parts from cars before sending what's left to recyclers.
The average life span of a car from the time it's sold at auction to the time it's crushed is four to eight weeks, Raess said. Buyers like U-Pull-It and other recyclers work directly with auctioneers to snatch up vehicles that fail to attract buyers.
Once a vehicle gets to the shredder, it dies a quick death.
At the heart of the Fremont operation is a 750-kilowatt electric motor boasting more than 1,000 horsepower. A host of 16 manganese steel hammers spin at 1,000 RPM to effectively disintegrate anything from aluminum frames to old farm equipment.
A system of conveyors and magnets then sorts ferrous scrap from nonferrous scrap like aluminum and insulation.
“A couple minutes, and (a vehicle) is gone,” Hoppe said.
The shredder's electric motor means All Metals Market doesn't have to replenish a fuel tank — the diesel option consumes 21 gallons of fuel an hour — so it's a cleaner operation. But that was a tall order for OPPD, which completed about $650,000 of construction and modifications on an existing circuit to bring adequate power to the site.
Keith Smith, electric service designer at OPPD, said All Metals Market agreed to cover “a large portion” of those costs and said the project would have cost millions of dollars had there not been an existing circuit already in place.
He estimated the shredder will consume about 275,000 kilowatt-hours of electricity per month. A typical home consumes 800 kwh to 1,500 kwh per month, depending on the season.
“Due to the cost of rebuilding the existing circuit, it had to be a large load to make it lucrative for OPPD (to pursue),” Smith said.
Had it not been for a close working relationship with OPPD, the project might not have come to fruition, Hoppe said. “We would not be running were it not for what OPPD did.”