Derichebourg // 2020-2021 Universal Registration Document

1

Presentation of the Group and its activities Environmental Services business

The non-ferrous metals recycling market (NFM) 1.2.1.1.2 The actors in both ferrous and non-ferrous scrap metal recycling are often the same. The volumes of non-ferrous metals processed by collectors are much lower (often one-tenth of the volume) than for ferrous scrap metals. Conversely, unit prices are much higher, as are unit margins. The tonnage collected in France by NFM operators is 1.69 million metric tons (2020 figures) with an equivalent value of €2.5 billion. For the French market (67% of tonnage collected by the Group) the breakdown of non-ferrous metals collected is as follows: aluminum and aluminum cables: 26%; lead and batteries: 12%; stainless steel and alloys: 15%; copper, excluding cables and motors: 9%; copper cables: 5%; brass alloys: 3%; zinc: 5%; other: 22%. Source: Federec, key recycling figures 2020. NFM to be recycled are found primarily in buildings, packaging, automobiles and industrial equipment. User industries are essentially foundries, refineries and other heavy industries. Recycling of end-of-life products will become increasingly essential since it is the only source of secondary non-ferrous metal, whereas primary resources are shrinking. Several other factors also favor the development of non-ferrous metal recycling. First, the production of primary ore is nonexistent in many areas of the world. Recycled products are thus the only “surface mine” available and are also a renewable source; in all cases, the reutilization of recovered products leads to savings in raw materials. It avoids CO 2 emissions and creates energy savings compared to the production of the same quantity of metal by the primary sector. Energy savings compared to the production of primary metal are about 60% to 80% for copper and 90% to 98% for aluminum – a clear-cut competitive advantage in a context of soaring energy costs and increasingly severe restrictions on greenhouse gas emissions. Even so, production cost savings are partially offset by the costs of collection and by environmental restrictions in industrialized nations. These limitations are less restrictive in emerging countries, which increasingly use this type of production and import recuperated products.

The recovering of end-of-life products alone accounts for approximately 35% of global non-ferrous metal production (source: Bureau of International Recycling). The global demand for non-ferrous metals correlates strongly with changes in the global industrial production index. A major shift occurred in 2018, with China’s decision to publish very strict specifications for impurity levels in 19 classes of products (including non-ferrous metals) in order to import them into China. These maximum rates are in practice very difficult to achieve, and the volume of Chinese imports has decreased significantly since the spring of 2018. Consequently, the volumes previously consumed by China have shifted to other markets, resulting in downward pressure on the prices of various non-ferrous metals. Prices of the various non-ferrous metals rose sharply during the first half of 2021 due to an increase in demand when lockdowns ended. The charts opposite summarize the price changes for various metals. On January 1, 2021, China removed the highest grades of non-ferrous metals (especially copper granulate) from waste status and once again accepted imports of these products. However, it imports almost no solid waste now. This waste has therefore been transferred to other markets (including India, Malaysia and Vietnam).

€11,500

$10,900

€10,500

$9,750

€9,500

$8,600

€8,500

$7,450

€7,500

$6,300

€6,500

$5,150

€5,500

€4,500

$4,000

oct.

oct.

oct.

apr.

apr.

feb.

feb.

apr.

feb.

dec.

dec.

dec.

june

june

june

aug.

aug.

aug.

2019

2020

2021

Price: Copper LME Settlement Price: Copper Euro

DERICHEBOURG 2020/2021 Universal Registration Document 18