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Armco Metals Holdings, Inc. (AMCO) Sets Sights on Industry-Leading Position, Adds Diversification to its Product Line
Leveraging the expertise and logistics of five strategic subsidiaries, China-based Armco Metals Holdings (NYSE MKT: AMCO) is aligned with the Chinese government’s push toward an environmentally friendly economy, achieved in part by an increase in scrap metal consumption.
Armco’s strategy to be a part of this initiative is to create low-cost, high-quality solutions to meet the demands of the steel industry and subsequently achieve its goal to become the largest scrap steel recycler in China.
In its more than 10 years of operation, Armco has established long-standing relationships with nearly a dozen international metal suppliers, more than 100 small-sized and medium-sized Chinese steel production companies, and some of the country’s large state-run foundries.
The company’s subsidiaries are located in key regions throughout the country to enable streamlined and efficient sourcing, importing, processing and distribution of quality, environmentally friendly recycled scrap steel, in addition to metal and non-ferrous metal ore.
The Armco (Lianyungang) Renewable Metals, Inc. subsidiary is located on 32 acres in the Jiangsu province and is home to the Texas Shredder Lindeman System, one of the most advanced recycling systems in the world. The Texas Shredder automatically shreds, sorts and separates recycled scrap steel to process highest-quality material and is capable of processing 1 million metric tons of scrap metal each year.
Armco is also seeking out diversification of its business model to capitalize on low-risk, high-return opportunities and has been taking steps to diversify its product line and develop new products into its existing business line.
In this regard, the company’s Armco Metals International subsidiary has entered into an agreement to purchase a trial shipment of Eucalyptus Nitens wood chips from a Chile supplier. The agreement calls for the purchase of roughly 50,000 green metric tons (GMT) in October 2014 and a one-year total importation of 550,000-600,000 (GMT) if the trial shipment is a success.
The market for these woodchips is new pulp mills in China that want to expand importation of woodchips to meet their growing needs. While China’s area of eucalyptus plantations doubled between 2006 and 2012, this expansion is not enough to meet market demands. Based on current market prices, Armco estimates the market value of 600,000 GMT woodchips at approximately $63 million and expects to realize 10% gross margin on potential sales of the product.
For more information, visit www.ArmcoMetals.com
