Steelmaker Gerdau plans to expand its ferrous footprint in the US southeast and bolster its ferrous scrap supply for its Jackson, Tennessee, mill with the acquisition of Dale's Recycling, which includes one shredder and nine yards.
Gerdau Ameristeel US, a subsidiary of Gerdau in North America, signed an agreement to acquire the assets of Tennessee-based Dale's Recycling Partnership for $60mn on Tuesday.
The deal includes land, inventory and fixed assets associated with the company's operations in Tennessee, Kentucky and Missouri.
Dale's Recycling, a full-service ferrous and non-ferrous scrap processor, operates a shredder in Milan, Tennessee, which is less than 25 miles north of Gerdau's merchant bar quality (MBQ) electric arc furnace (EAF) steel mill in Jackson, Tennessee.
Gerdau's acquisition follows numerous other steel mill consolidations throughout the recycling sector in recent years as steelmakers attempt to capture and secure captive ferrous scrap and raw material supply in an increasingly competitive market.
Approximately 13mn short tons/yr of EAF steelmaking capacity is slated to be brought on line between 2024-2026 for numerous long and flat steel product projects across West Virginia, Pennsylvania, Arkansas, Kentucky, Ohio, Mississippi and North Carolina.
The steep surge in scrap-intensive melting capacity will help fuel increased competition for scrap across the US in the coming years.
EAFs account for over two-thirds of US steel production capacity but are poised to take an even greater share over the next two years as major expansions come on line, including the 3mn st/yr flat-rolled mill by Big River Steel 2 in Osceola, Arkansas, and Nucor's 3mn/yr sheet mill in Mason County, West Virginia.
Closing of the transaction is subject to the usual regulatory conditions.
