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Schnitzer (SCHN) Restarts Cascade Mills, to Buy Columbus Assets

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Schnitzer Steel Industries, Inc. has restarted production at its Cascade Steel Rolling Mills in McMinnville, OR. It has also entered into an agreement to acquire the assets of Columbus Recycling, a leading provider of ferrous and non-ferrous metal recycling products and services, in the Southeast region of the United States.

Due to the restart timeline and scaling up of operations, Cascade is expected to finish a limited number of sales prior to the end of August, the close of Schnitzer’s fiscal year.

Schnitzer is pleased to get the mill running ahead of schedule. The mill will benefit the customers by providing them with premium quality finished steel products. Moreover, the electricity is more than 95% carbon-free, thereby significantly reducing the carbon impact of the steel produced from it in comparison to the industry average.

Per Schnitzer’s agreement with Columbus, the former will acquire eight operating facilities across several states in the Southeast, including Mississippi, Tennessee, and Kentucky. The transaction is expected to close in first-quarter fiscal 2022, subject to regulatory approvals.

Together with Schnitzer’s nine other existing facilities in Georgia, Alabama and Tennessee, the newly acquired operations will provide additional recycling products, services, and logistics solutions to customers and suppliers spanning across the Southeast. The region is anticipated to witness a sharp increase in electric arc furnace steelmaking capacity in the coming years.

The Columbus assets buyout is expected to broaden Schnitzer’s offerings, resulting in immediate scale up of operations as well as synergies. The transaction is harmonious with its strategy of growing its metals recycling operations to meet the rising demand for steel and nonferrous metals as there is increased transition to low carbon technologies. Also both companies aim for sustainable operation and service toward their customers.

Shares of Schnitzer have appreciated 169.6% in a year compared with the industry’s rise of 140.9%. The estimated earnings growth rate for the company for the current year is pegged at 1,253.5%.
 

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Schnitzer’s productivity improvements and cost-reduction actions, along with continued commercial initiatives, are lending support to margins. The company should also benefit from an improvement in ferrous and nonferrous markets, debt reduction actions, and transition to the new One Schnitzer operating model, which is designed at increasing its efficiency.

Zacks Rank & Other Stocks to Consider

Currently, Schnitzer sports a Zacks Rank #1 (Strong Buy).

Other top-ranked stocks in the basic materials space include ArcelorMittal (MT - Free Report) , National Steel Company (SID - Free Report) and Aperam (APEMY - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

ArcelorMittal has a projected earnings growth rate of 1,731.2% for the current year. The company’s shares have shot up 191.2% over the past year.

National Steel has a projected earnings growth rate of 443.3.3% for the current year. The company’s shares have skyrocketed 184.4% over the past year.

Aperam has a projected earnings growth rate of 429.8% for the current year. The company’s shares have grown 114.6% over the past year.


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