After Acquisition, Scholz International's Global Reach Expands

By Hacienda Network Staff Writer

It has been an eventful year for Scholz International, the United States based international trading arm of Scholz Recycling AG based in Essingen Germany. Scholz was acquired in July by Chiho-Tiande Group Ltd., the leading mixed metal scrap recycler and importer in China and the largest buyer of electro scrap motors from Europe, for approximately $250 million.

"We're truly global - we're a global company now," says Darrell Wong, who runs the company's U.S. operations from its Hacienda office.

Scholz Recycling was already one of the leading scrap recyclers of the western world, with a presence in Germany, Poland, Austria, the Balkans, the Czech Republic, the United States of America and Mexico. The 160-year-old firm employs 7,500 people at 500 locations, collecting over 10 million metric tons of scrap steel and non-ferrous metal and then processing and returning it to the economic cycle every year. Now, with the acquisition by Chiho-Tiande Group, those numbers are expected to go up.

"Chiho - Tiande have joint ventures that manufacture semi-finished and finished products, so they may take copper or aluminum or steel and manufacture them into rebar, structural steel, or plate and sheet," Wong says. "They were looking for upstream acquisitions and then downstream raw material sources, trying to close the circle."

Wong also notes that the new parent company was interested in "economies of scale."

"Scholz possesses technology and expertise in certain areas of recycling. In Europe, there are standards which we have to use - the automobile has to be recycled to 98 percent, and we have a lot of that technology in Germany. Scholz has developed that, and that is something that the Chinese group was interested in."

The international nature of the company's operations provides insight into the growing interdependence of national economies.

"When we buy a hundred tons of a material, it gets loaded in overseas containers and gets shipped to the end user. We provide this service to a lot of companies here in the U.S. and North America - we finance it and we handle logistics," Wong says. "There are terminal markets such as the CME in New York, London and Shanghai Metal Exchanges, and all of our items are price indexed off of those terminal markets."

One challenge Wong sees on the horizon has to do with changing trends in manufacturing. "The amount of secondary scrap material is declining partly due to the miniaturization in manufacturing. Think of how little metal there is in a smart phone - not very much," he says. "But there will always be a need for recycled metals."

Similarly, he notes that the company's existing infrastructure and expertise could be used in other markets as well. "We don't necessarily have to recycle metal," he says. "We can recycle plastics, resins and paper products."

For additional information on Scholz Recycling, access www.scholz-recycling.com. The web site for Chiho-Tiande Group Ltd. is available at www.chiho-tiande.com.

Photo: The lobby where Scholz International conducts business.

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