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Marginal Metal

by Aug 12, 2019Environmental, Magazine

Steel is the most recycled material in the world, but volume doesn’t always mean profit

A mountain of junked cars at K&K Recycling in North Pole. These vehicles have had their batteries removed and their fluids drained but will have to have their tires removed before they can be recycled.

©Sam Friedman | Alaska Business

In the world of recycling, the line between trash and treasure moves with geography and the state of world markets.

Generally speaking, plastics tend toward the trash end of the spectrum, especially low-grade materials like the “clam shell” plastic boxes that Anchorage and many other towns across the United States recently began to throw away as they’ve lost value as recycled materials.

Used metals, on the other hand, usually have value. Sometimes they have enough value to warrant extensive processing work—even enough to inspire thieves to tear out copper wiring or vehicle catalytic converters to “recycle” them. That’s especially true for non-ferrous metals: metals that don’t contain iron. Non-ferrous metals include aluminum, copper, and even precious metals like gold, silver, and platinum.

Ferrous metals include steel, the most recycled material in the world. On average, the United States produces enough ferrous scrap by weight to produce twenty-five Eiffel Towers every day, according to the Institute of Scrap Recycling Industries, a national trade group.

But ferrous metals usually have less value by weight, which can make profit margins thin for scrap yards when prices drop, especially in places like Alaska with high transportation costs. It doesn’t help that many of today’s consumer products like cars and refrigerators have less steel and more unrecyclable parts like foam and plastic than they used to.

No Cash for Clunkers

It wasn’t nearly as big a payout as the $1,000 from the 2009 federal government “Cash for Clunkers” program, but vehicle owners in Fairbanks about five years ago used to be able to get a bit of cash (less than $20 to as much as $40 for a 1 ton pickup) from metal recycler C&R Pipe and Steel for the metal value of their cars.

Those payouts stopped in 2014, when metal prices dropped. Today, C&R founder Dennis Wilfer doesn’t accept junked cars from the public because they’re more trouble than they’re worth. He does process junked cars for salvage yard clients and for the Fairbanks North Star Borough’s junked car program.

Newer model junked vehicles in decent shape in Alaska’s second largest city can still be turned into cash, but at auto salvage yards, not metal recyclers. Most of their value is in their still-working parts, not their bulk metal value.

Because of scrap metal prices, junked cars have become a liability in Fairbanks instead of a small asset. Despite the low or even negative market value of junked cars, the Fairbanks North Star Borough junked vehicle program will still accept any vehicle that’s delivered to the borough landfill at no cost. Businesses pay a fee of $30.

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A row of junked cars at the Fairbanks North Star Borough Solid Waste Facility. The middle vehicle is a Toyota Corona from the 1970s.

©Sam Friedman | Alaska Business

For residents, the deal of getting rid of an unwanted vehicle at no cost has increasingly been worth it in the last few years. The program tends to be popular when scrap prices are down, and scrap yards in Fairbanks are unlikely to pay anything for the scrap value of a car, says Grant Wright, solid waste environmental specialist at the borough landfill.

As of June, crushed cars were selling in the Pacific Northwest for about $165 per net ton, says Wilfer at C&R. That’s a similar price to the last market low in late 2014.

The borough program has disposed of between 400 and 800 vehicles per year in recent years. This year the borough budget predicts the program will receive about $5,500 in scrap metal receipts and will pay about $84,000 for the expense of preparing vehicles for recycling and towing junked cars found abandoned on borough property.

Although the junked vehicle program doesn’t pay for itself when metal prices are low, it’s worth the expense because it diverts waste from the landfill and encourages people to remove abandoned vehicles, says Bob Jordan, the borough’s solid waste manager.

“We don’t want to bury scrap metal because it’s got some value to it,” he says. “The other good thing about it is it’s one less junked vehicle that we have in our community, one less that you find in someone’s yard or along the ditch. You have to give some value to that, but it’s hard to decide the dollar value.”

The Car Recycling Process

At the Fairbanks North Star Borough Solid Waste Facility, junked cars waiting to become recycled metal sit on an old landfill, a grassy hill overlooking Fairbanks and the Alaska Range. Vehicles awaiting destruction range from clean looking vehicles driven to the landfill on their own power to picked-apart chassis.

“It’s a good way to pick out what model of car to buy. You see which ones come here after ten years and which ones come here after twenty years,” says Wright.

Before they’re scrapped, the vehicles have their titles investigated. If the person who brought in the car isn’t the owner—such as if the car was abandoned on the side of the road—landfill staff make an effort to research and contact the owners to see if they object to the vehicle being scrapped. Very few do.

When the vehicles are ready to be scrapped, a forklift carries them onto stands where they’re drained of fluids including oil, gasoline, antifreeze, brake fluid, and refrigerant. The landfill burns the used oil in a furnace used to heat the facility’s buildings.

C&R has a fifty-acre yard next to the landfill and has borough contracts to both drain junked cars and sell them to a Lower 48 metal recycler.

Wilfer started C&R in 1992 as a provider of new pipes and metal products for North Slope projects. He got into metal recycling as a natural sideline, accepting used steel products from the companies he sold new products to. Today, C&R Recycling, the recycling side of the company, accounts for about 40 percent of the business, he says.

After being drained, the junked cars pass out of the landfill and across the railroad tracks into the C&R yard, where they’re condensed and loaded onto railcars for the journey south.

Railroad access is vital for recycling junked cars, as well as other scrap steel and iron. Rail shipping is significantly less expensive than trucking.

While C&R doesn’t buy cars from the public any more, the business does accept other steel and iron products. In addition to cars, other products that have only marginal scrap value in Fairbanks include culverts and “white goods,” which are domestic appliances like washing machines and stoves, says Wilfer.

“I buy almost no ferrous metals. We recycle them and accept them, but the logistics of getting them out of here is very difficult,” he says. “You look around here, we’ve got that big scrap pile and the only reason it’s here is because I can’t ship it. I need rail cars to ship it and there are only so many available.”

K&K Recycling employee Zac Eckelberger works to remove wire ends at K&K Recycling in North Pole. Both the ends and the wires can be recycled, but they’re worth more if they’re separated.

©Sam Friedman | Alaska Business

A contractor uses a forklift to pick up a junked truck at the Fairbanks North Star Borough Solid Waste Facility.

©Sam Friedman | Alaska Business

The Last Recyclables Left

Five years ago, K&K Recycling in the North Pole area was a main consumer product recycling service in the Interior, accepting products including plastics, cardboard, glass, and aluminum at pickup locations around Fairbanks and North Pole.

K&K is owned by Bernie Karl, whose other business, Chena Hot Springs Resort, uses energy generated from the hot springs. At K&K, Karl planned another energy project. Instead of shipping plastic and paper to the Lower 48, he stockpiled it, planning to use it as fuel. It wasn’t successful. Citing big losses, K&K stopped accepting plastics in 2014 and got out of the glass, cardboard, and tin business in 2016. Today, no one processes glass or tin cans for recycling in Fairbanks.

K&K kept what Karl says was the only profitable part of business: metals including aluminum cans and scrap metal. K&K is now exclusively a metal recycling business that, like C&R, will pay customers for non-ferrous metals and will accept ferrous products for recycling without payment.

Like the borough, K&K currently accepts junked vehicles at no charge. That could change if scrap metal prices continue to decline, says Manager Chris Bowen.

“We don’t pay. We can’t pay. But we don’t charge either,” he says. “But if it keeps going down, we might be forced to.”

The End of the Line

The economic case for recycling cars and other low-value metals is especially hard to make in rural Alaska villages. Even at Yukon River villages, where barge service makes shipping significantly cheaper than in more remote villages, the cost of recycling a vehicle dwarfs its scrap metal value.

Some of this metal trash still gets shipped to recyclers thanks to grant funding for village cleanup projects and Alaska businesses that describe their work on rural metal recycling as pro bono community service.

At Wilfer’s office at C&R, a certificate hangs on the wall thanking the business for its help accepting scrap metal from rural villages along the Yukon River. When he can, Wilfer picks up loads of this scrap metal from a river barge terminal in Nenana or at the Fairbanks International Airport if the scrap comes in by air freight.

“We endeavor to that, if we’re not too busy doing other stuff. It becomes almost like a service, because there’s certainly no money in it,” he says.

For river barge company Ruby Marine in Nenana, transporting waste back to the company terminal is also more charity than business, says company President Matt Sweetsir. Ruby Marine charges $250 for a vehicle or $10 for a pallet of other backhaul waste.

Sweetsir describes these charges as “nominal” amounts that don’t fully cover the costs associated with handling the freight. Vehicles are a particularly troublesome cargo because they often leak fluids or leave behind broken glass on the decks of Ruby Marine’s barges or at its terminal.

Handling backhaul for villages can also bring the nuisance of holding waste at the terminal in cases where the village doesn’t line up the logistics of getting the scrap moved on to a recycler in Fairbanks.

Backhaul expenses are usually paid by grants, so billing villages for leaving scrap at the business isn’t usually an effective incentive, Sweetsir says. But a type of peer pressure does work. If one village won’t remove the scrap from his yard, Sweetsir will temporarily stop the entire waste backhaul program.

“The only pressure I can put to bear on these cleanup fleet people is their counterpart in a different village. What was happening is we’d pick something up, and then that person in the village was all done as far as they were concerned. It was not in their village anymore,” he says.

“Until I could find a way to make sure that it gets the hell out of our yard, it was just sitting here. So basically, everyone is aware that it’s a coordinated effort in the sense that I’m holding Ruby responsible for Galena’s trash.”

From an environmental perspective, it’s most important to remove waste like batteries and used oil from villages that lack the landfills to process these toxic substances and could have their groundwater contaminated by them, Sweetsir says.

It’s also useful to remove bulky metal waste like vehicles because they take up an especially large amount of space.

However, Sweetsir suspects it’s not worth it to haul out the vehicles.

“As for cars and sno-gos, to me that’s just a waste of time and effort. We’re doing them, but it’s not a hazard to the community,” he says. “To me, it’s almost environmentally backward to move that crap around the world to recycle it. It’s just a bit too much of a stretch.”

A pile of “white goods” at the Fairbanks North Star Borough Solid Waste Facility. White goods are appliances like refrigerators and washing machines that have marginal value to metal recyclers in Alaska because they contain a relatively small amount of recyclable metal for their large volumes.

©Sam Friedman | Alaska Business

A scrap metal baler at K&K Recycling in North Pole. A baler allows a scrap yard operator to compress low value scrap metal, making it more efficient to transport.

©Sam Friedman | Alaska Business

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Welcome to the 2024 Best of Alaska Business special section! For the ninth time we invited our readers to tell us which Alaska businesses they love the most, this year in forty-four categories. Throughout the month of March, you told us who should be featured in these pages, and we're thrilled to be able to publish the results.
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