Network Metals LLC

Some weeks ago in a report we discussed Horsehead Holdings (NASDAQ:ZINC), a North American zinc producer from which primary zinc output is produced through EAF dust recycling. EAF dust recycling is has been in the metals news in recent days, as a number of dust recyclers have been scrambling to find new sources of EAF dust. With the extreme downturn in steel consumption, and therefore production, dust supply has been increasingly hard to come by for these producers, and plans to expand facilities and production have often been put on hold. A recent Platts article specifically mentioned Steel Dust Recycling (a relatively new private steel dust processor in the southern US), and its putting on hold plans to build a new Texas processing
facility.

EAF dust recyclers have cited their need to seek out steel producers still sending their dust to landfills instead of recyclers, and insist that the trend is still toward recycling. We are inclined to agree with that sentiment, if only because a profitable recycler like Horsehead has a reciprocal relationship with its suppliers; its raw material suppliers are also its finished product consumers. In this way the recycling business is very much self-sustaining, and totally independent of the pricing of the typical mined ore/processed metal that dominates
the global market.