Increasingly, organizations recognize that current economic models contribute to resource depletion, biodiversity loss, waste generation, harmful substance emissions, and the climate crisis. Therefore, it is key to advance towards a robust circular economy system or model, in which raw materials, supplies, and resources are used efficiently and generate environmental, social, and economic value for society, while managing and producing sustainably, restoring and renewing, and growing in the quality of the product delivered to the market and in the health of ecosystems.
In this context, the Sociedad de Fomento Fabril (SOFOFA), together with SOFOFA Hub and the Territorio Circular Program (promoted by Corfo and the Ministry of the Environment) launched the second Practical Guide for Circular Business Management, a document that gathered circular economy business best practices and provides practical technical knowledge from participating companies to share replicable experiences in circular economy management from the business sector.
ME Elecmetal actively participated in this Guide, along with other companies such as CMPC, Anglo American, Collahuasi, Empresas Iansa, Colbún, Asfalcura, Enel, Sacyr, Volta, Emiliana, and Tresmontes Lucchetti. The result was the co-construction of a best practices manual, based on the experience and evidence provided by their management indicators.
Globally, ME Elecmetal's key to supporting the Circular Economy, optimizing logistics and production processes, is the recovery of metallic by-products that then go to foundries through the following means:
- Direct purchases from customers.
- Indirect purchases from customers through intermediaries.
- Purchases from third parties (for example, other metallurgical companies and scrap yards).
ME South America
By recovering Metallic Raw Material (MRM) from our customers, they achieve better purchase prices on steel parts. This is due to the Supply Agreement + Scrap Contract arrangement, while better managing their sites and reducing their Scope 3 GHG emissions.
On the other hand, ME Elecmetal ensures inventory and traceability, maximizing the steel life cycle and producing with high chemical quality. Thus, both ME Elecmetal and its customers achieve economic benefit: the customer sells their by-product as MRM and the company sells its parts at a better price, given the polynomial or price equation that reflects this circular operation.
ME North America
Based on a recovery model similar to ME South America, both the Tempe and Duluth foundries, as well as the supply chain team, are currently recovering 64% of the MRM needed to support semiannual production, of which 64% is traceable to origin.
ME China
The Guangzhou foundry recovers 98% of the total required MRM from third parties, thus ensuring operational continuity (equivalent to 97% of total semiannual production), among which only 1.8% is traceable to origin due to territorial and regulatory structural characteristics, long distances, and raw material import difficulties. However, this presents an opportunity to request traceability from upstream scrap suppliers and downstream and/or upcyclers, adding value to the entire process.
Regulatory compliance:
In many countries, stricter regulations are being implemented to reduce the environmental impact of companies. Adopting these circular economy practices can help companies comply with these regulations, moving forward in that direction.
Innovation:
The circular economy drives innovation in product and process design, as well as logistics, which can lead to new business opportunities and competitive advantages, in addition to Scope 3 GHG reductions.
Cost reduction:
Given the polynomial or price equation contained within the Supply Agreement + MRM Contract figure, the client achieves better prices, even becoming a metallurgical supplier in a closed, clean, and efficient Supply Chain.
Improvement of corporate image:
Adopting circular economy practices can enhance the company's image and reputation, as it is perceived as an organization committed to environmental sustainability and social responsibility. In other words, integrating into this MRM Recovery Chain is a form of collaboration in a sustainable and applied business model.
As a result of this approach and recovery model in the three production regions: ME South America, ME North America, and ME China, the recovery rates during the first and second quarters of the current year are as follows:
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“Becoming increasingly circular is key and a fundamental part of our Global Corporate Business Model, as it allows us to emit less GHG into the atmosphere, approach zero in final waste disposal, and significantly extend the useful life of our main product and its traceability to origin.”
ME Elecmetal has successfully developed an MRM recovery model based on circularity. Below is the importance of this business model:
- Ensures operational continuity and inventory of raw material - metallic by-product - for the production of high-quality steel liners, recovering from mining customers, meeting all technical, operational, logistical, and occupational health and safety requirements of each party, and maximizing the circularity of the main input.
- Implements operational, logistical, and economic efficiencies in raw material recovery, ensuring the technical quality of the product with origin traceability, reducing carbon emissions from transportation, and optimizing purchase costs of liners for customers and raw material for the foundry.
- Positively impacts the mining customer's logistical management in their handling yards, supporting their reduction of carbon footprint in the supply chain at scope 3 and the recovery of potential environmental liabilities in their operation.
- Extends the life cycle of raw material, maximizing the circulation of metallic by-products from final production.
With these elements in mind, ME Elecmetal has defined four indicators for monitoring and managing metallic raw material:
- Tonnes of metallic raw material (MRM) recovered per total produced.
- Percentage of MRM recovered.
- Percentage of metallic raw material recovered and traceable to origin.
- Percentage of recycled material used in production over the total raw material in one year of production.
For more details on the ME Elecmetal case, download the guide here.
