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Feature: Gold star for scrap merchants

The UK scrap recycling industry received a pat on the back in April when winners of the annual Queen's Awards for Enterprise included no less than three scrap merchants in the international trade category.

Non-ferrous scrap merchant FJ Church's turnover has tripled since 1999 to £37 million from sales of aluminium, copper, and other non-ferrous scrap and the share of its business derived from exports has risen from 23% to 85%. The two other winners are Dunn Brothers (1995) and GD Metal Recycling.

While the health of the UK secondary smelters is suffering as manufacturing emigrates, scrap is a much more flexible sector and merchants are benefiting directly from globalisation. Patrick Church, joint managing director of FJ Church points to the interesting position a company such as his is in: "We buy retail and sell wholesale: we can take in a few kilos here, and a few kilos there, from those who cannot access the recycling loop. We take in material from something like 2,000 suppliers and group it, so we can ship it on to around 20 customers."

Whether buying or selling, scrap merchants do not have to depend on their immediate locality, partly because the cost of container shipping has not risen in the dramatic way that bulk shipping has. "Transport is not expensive. It's as cheap to ship to the Far East as it is to send a lorry to Scotland," Church says.

FJ Church sources around 55% of its material in the UK and the rest is imported. Quality control is carried out at the company's base in Rainham, Essex. The company owns one-and-a-half acres of warehousing, and exports are shipped from the Felixstowe, Southampton and Thames ports.

Aluminium is a staple, but accounts for only 20% of FJ Church's business. Some is bought and sold without even entering the UK. "We send more aluminium to the Indian than the Chinese auto business. China is ramping up, and when it begins to put cars on the roads they will need to import more."

Rare earth and minor metals are better business. The CIS is a good source of tantalum capacitors, W bar, zirconium and niobium plate and rod, and Japan is a good market, according to Church. Platinum group metals from scrapped catalytic converters is "a large part of the business." Much of it comes from the Caribbean, Latin America, Africa and Russia - "from some unexpected places: wherever there are imported Japanese cars," Church says. FJ Church is one of only a few UK scrap merchants that has added platinum, palladium and rhodium to its business.

The introduction of the ELV Directive has boosted the volumes of PGMs, particularly of platinum, now coming into the recycling loop. The introduction of the waste electric and electronic equipment (WEEE) Directive is set to have a similar effect. Although the company is not directly involved, it is doing some trial runs to see what the revenue stream might be for the business. "There are new entrants to the market. Some in the recycling sector are moving across, looking for a commercial opportunity [to become] a take-back facility. People are coming to us with copper and gold connectors, asking for a valuation. We're optimistic," Church says.

Although FJ Church declines to report the volumes it deals in, numbers for UK imports and exports of non-ferrous scrap are available. According to the 2004 Yearbook of the British Recycling Manufacturers Association, imports of aluminium and nickel scrap fell considerably compared with 2003 - aluminium imports fell by around 23% to 7,000 tonnes, and nickel by over 50% to just over 9,000 to

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