The Metals Recycling Business is one of the three vertically integrated business units that make up Schnitzer Steel Industries, Inc. As one of the nation's largest recyclers of scrap metal, we collect, process, recycle, trade and broker metal, both ferrous (containing iron) and nonferrous (not containing iron). We pride ourselves on being a very efficient, low cost scrap metal processor.

Scrap metal is purchased from industrial manufacturers, railroads, auto salvage facilities, metal dealers and individuals. The metal generally comes from obsolete machinery and equipment such as autos, railroad cars, railroad tracks, home appliances and demolition metal from buildings and other obsolete structures. As part of our vertical integration, we also purchase crushed auto bodies from our Auto Parts Business, where geographically feasible. Purchased materials arrive at our 58 facilities daily by ship, barge, rail, truck, car and even individuals on foot.

Our proximity to large industrial suppliers and major railroad routes, deep water ports and major highways provides us with a competitive advantage. Our West Coast facilities allow us to purchase scrap material from Hawaii, Central and Northern California, northward up the West Coast to Western Canada and Alaska and to the east including Idaho, Montana, Utah and Nevada. Our Northeastern U.S. facilities provide access to suppliers in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. Meanwhile, our Southeastern U.S. facilities allow us to purchase scrap metal from Alabama, Florida, Georgia, North Carolina, South Carolina and Tennessee. Finally, our facilities in Puerto Rico allow us to purchase scrap metal from Puerto Rico and other Caribbean nations.

Once the scrap metal arrives at one of our yards, it is processed by sorting, shearing, shredding, torching and baling. This results in metal processed into pieces of a size, density and purity required by steel mills and foundries for melting and use in the production of new finished steel and other products. Smaller, more homogeneous pieces of processed metal have more value because they melt more easily than larger pieces and more completely fill the "charge buckets" that are used to load a steel mill or foundry furnace, resulting in lower energy usage and shorter cycle times.

One of the most efficient ways to process metal is to use shredding systems, such as those installed at nine of our facilities. In a few seconds, a shredder can reduce auto bodies, home appliances and other metal into fist-sized pieces. Shredded material is then carried by conveyor under magnetized drums which attract the ferrous metals and separate them from the nonferrous metals. The remaining nonferrous metal is sold either sorted and graded or unsorted. Processed recycled metals are sold to domestic and foreign customers including ferrous metals sold to our Steel Manufacturing Business (highlighting another example of our company's vertical integration). We have developed efficient nationwide transportation networks consisting of extensive truck fleets, accessible rail systems and seven export facilities located at deep water ports. Our network is designed to meet the needs of our suppliers and customers, both large and small. In fiscal 2012, our recycling facilities processed over 5.1 million tons of ferrous metal and nearly 629 million pounds of nonferrous metal.