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Metal Recycling Importance increasing with Green credentials, Peak Everything and Rising Prices (Metallum,CMA)

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Metal Recycling importance has increased dramatically in recent times highlighted by the rare earth metals embargo imposed on Japan by China following a fishing incident.With global population increasing and per capita consumption rising,global commodity prices have increased dramatically in the recent decade.According to Jeremy Grantham we have entered a new age of scarcity and we are seeing it already in the form of rising prices.With prices of metals touching new highs,recycling has assumed increasing importance.The Japanese companies have already starting researching on increasing the recycling of rare earth metals.With prices of copper,silver and other metals touching new highs,recycling technology has become more valuable.Hitachi is looking to increase the amount of Rare Earth Supply through new recycling technologies.Showa Denko another major REE consumer is also looking towards recycling in Vietnam to secure the supply of Rare Earth Metals.Japan’s government and its giant conglomerates have massively increased their efforts in new process and sources for Rare Earth after the Chinese shock.

Global Commodity Parabolic Price Rise Bubble or Real- Is it Really Different This Time

Grantham has made a famous call that the rise in commodities is not a cyclical phenomenon but a secular long term one.He says that the rise in commodity prices is different from the past.Note Grantham has done an extensive study of bubbles and is one of the leading minds in the investment community.While every time in the past,the statement “this time is different” has led to a crash,Grantham’s call cannot be taken lightly.He says that the rise in population,shortage of resources,the growing consumption power of massive chunks of prosperous citizens in India and China will lead to a continued surge.Note commodity prices have declined secularly in the last century and since 2000 have managed to erase all their losses to form new peaks.Grantham also says there is a possibility of a massive short term decline which will give a historic opportunity to load on commodities.Jim Rogers is the most famous commodity bull and now Grantham has joined him

This has started to make smart money increasingly interested in metal recycles.KKR the leading PE firm has made a $95 million dollar bet acquiring a leading metal recycler CMA. First Reserve followed suit soon afterwards with a 10 time bigger bet buying Metallum.Note e-waste recycling has become a highly profitable business as well both due to increasing government regulation and rising realizations from the useful products like gold,silver,copper extracted after recycling.Recycling is a Green alternative to extracting metal from mining as it uses less money,effort,energy reducing GHG emissions.

More private equity firms to target scrap metal

In April, First Reserve Corporation squeezed into the tight copper market through its 670 million euro ($968.8 million) acquisition of Europe-based metal refining and recycling company Metallum.Just before that, Kohlberg Kravis Roberts & Co invested about $95.0 million through its KKR Asset Management unit ( KAM) in Australian metal recycling group CMA Corp Ltd.


Abhishek Shah

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