Italy | KME Group SpA of Italy, one of Europe's leading copper producers, is set to secure its second stake this year in a metals trader as part of its diversification into the scrap metals business. KME has agreed to buy 30% of Italian ferrous and non-ferrous metals trader Sigimet SpA for Euro 1.8 million (US$ 2.41 million) with an option to purchase another 21% within three years.
Luciano Parolai, Chairman of the KME Recycle holding company set up to oversee the new scrap business, says more acquisitions can be expected this year. 'We do not plan to make other acquistions in Italy,' he has told the Reuters news agency. 'At the same time, we are in talks with companies in other European countries with a goal to create a network of European companies which do the same recycling business.'
In February this year, KME bought a 30% stake in Italian scrap metals trader Metalbuyer with an option to raise the shareholding to 51%. And in April, the group confirmed plans to buy considerable - but not majority - stakes in other scrap companies based not only in Italy but also elsewhere in Europe. According to Mr Parolai, KME Group does not intend to raise its stake in either Metalbuyer or Sigimet beyond 51% and will co-manage the companies with their current owners.
The KME Group relies on scrap for more than half its metal supplies; therefore, acquisition of metal trading companies and an expansion of non-ferrous metals trading will result in cost reductions, comments Mr Parolai. 'Acquisitions will benefit the (group's main) industrial activity, but it was not the main reason for buying them,' he explains. 'It is more about diversification than integration.'
Demand for scrap metal has eased owing to the global economic downturn but remains 'fairly strong' because generation has also declined, he adds.
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