9 / Schnitzer Steel Industries, Inc. Form 10-K 2021 The long-term effectiveness of existing antidumping and countervailing duty orders related to imports of wire rod and rebar products is largely uncertain and is impacted by the level and pricing of imports and the U.S. Government’s assessment of antidumping and countervailing duty margins as well as its assessment of continued injury to the U.S. industry as part of the sunset review process. In March 2018, the United States imposed tariffs in the amount of 25 percent and 10 percent on imports of certain steel and aluminum products, respectively. The imposition of the tariffs was the conclusion of an investigation started in April 2017 under Section 232 of the Trade Expansion Act of 1962 that allows for an exemption from normal international trade rules if imports of a product are harming national security. Currently, imports from Argentina, Australia, Brazil, Canada, Mexico, and South Korea are exempt from these duties pursuant to various agreements, including quotas. The Department of Commerce also implemented an exclusion process whereby U.S. entities can request that certain products be excluded from the Section 232 tariffs. We review any exclusion requests relevant to our product line to determine whether an objection might be appropriate. To date, the Biden Administration has allowed all Section 232 duties and procedures to remain in place. Coronavirus Disease 2019 (“COVID-19”) We continue to monitor the impact of COVID-19 on all aspects of our business. We are a company operating in a critical infrastructure industry, as defined by the U.S. Department of Homeland Security. Consistent with federal guidelines and with state and local orders to date, we have continued to operate across our footprint throughout the COVID-19 pandemic. Following the onset of COVID-19 and its negative effects on our business, most prominently reflected in our third quarter fiscal 2020 results, global economic conditions improved during fiscal 2021, resulting in increased demand for our products and services, which led to our earnings for fiscal 2021 substantially exceeding the results for fiscal 2020. Acquisition of Columbus Recycling On August 12, 2021, we entered into a definitive agreement with Columbus Recycling, a leading provider of recycled ferrous and nonferrous metal products and recycling services, to acquire eight metals recycling facilities across several states in the Southeast, including Mississippi, Tennessee, and Kentucky. The transaction closed on October 1, 2021, during the first quarter of our fiscal 2022. The acquired Columbus Recycling operations purchase and process scrap metal from industrial manufacturers, local recycling companies, and individuals, and sell the recycled products to regional foundries and steel mills. Combined with our twelve existing metals recycling facilities in Georgia, Alabama, and Tennessee, the acquired operations offer additional recycling products, services, and logistics solutions to customers and suppliers across the Southeast, a region that is expected to see a significant increase in EAF steelmaking capacity in the coming years. The cash purchase price was approximately $107 million, subject to adjustment for acquired net working capital relative to an agreed-upon benchmark, as well as other adjustments. We funded the business acquisition using cash on hand and borrowings under our existing credit facilities. Regulatory Matters Impact of Legislation and Regulation Compliance with environmental laws and regulations is a significant factor in our operations. Our businesses are subject to extensive local, state, and federal environmental protection, health, safety, and transportation laws and regulations relating to, among others: Remediation under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”); The discharge of materials and emissions into the air; The prevention and remediation of soil and groundwater contamination; The management, treatment and discharge of wastewater and storm water; Climate change; The generation, discharge, storage, handling and disposal of hazardous materials and secondary materials; and The protection of our employees’ health and safety.
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