Highlights:

Sims to supply up to 550,000 tonnes of scrap annually to Alter Steel’s planned EAF in Queensland.

The company plans to develop Pinkenba site with initial AUD 40 million investment approved for FY26–FY27.

Sims shifts focus towards domestic steel supply, following earlier deal with New Zealand Steel.

Sims Limited (ASX:SGM) has announced the signing of a non-binding Memorandum of Understanding (MOU) with Equest Steel Pty Ltd, operating as Alter Steel, for a proposed scrap supply and services arrangement. The agreement is centered around Alter’s planned Electric Arc Furnace (EAF) facility in Pinkenba, Queensland, scheduled to commence operations in 2028.

Under the terms of the MOU, Sims would exclusively supply up to 550,000 tonnes of ferrous scrap per year to Alter Steel. The company would also manage Alter’s scrap inventory using a just-in-time approach and provide access to port and rail infrastructure through the staged development of its Pinkenba site, which is located approximately one kilometre from the planned EAF facility. While the MOU is not yet binding, it will serve as the framework for negotiations on a definitive agreement.

This proposed collaboration reflects a shift in Sims’ supply strategy, redirecting a significant portion of its ANZ Metal scrap volumes to domestic customers. Currently, around 50% of Sims’ ANZ scrap is exported. The agreement with Alter, combined with an earlier 2024 supply deal with New Zealand Steel, indicates a structural move toward domestic consumption. That previous arrangement, covering the supply of at least 200,000 tonnes of scrap annually over five years, will support New Zealand Steel’s Glenbrook EAF operations starting in early 2026.

Sims is a global metal recycling company headquartered in Sydney, Australia. The company operates across North America, Australasia, and the UK, with capabilities in ferrous and non-ferrous recycling, electronics recovery, and resource renewal. Through its operations, Sims processes millions of tonnes of material each year.

The Pinkenba site plays a central role in Sims’ evolving ANZ strategy. The facility is being developed into a logistics and recycling hub aimed at reducing road freight reliance by expanding rail and shipping transport. This transition is expected to bring operational efficiencies and enhance supply chain resilience. Sims has estimated the total investment for Pinkenba at approximately AUD 215 million over the next decade, with AUD 40 million already approved for FY26 and FY27.

The site will not only service customers like Alter Steel but will also support the consolidation of Sims’ Rocklea and Northgate operations, potentially unlocking proceeds from land sales and delivering long-term cost and scale benefits.

Sims’ CEO, Stephen Mikkelsen, noted the significance of the agreement in providing volume certainty and operational alignment through the Pinkenba hub. Alter Steel’s CEO, Grant Johnston, commented that the MOU completes the upstream supply link for their low-emissions steel manufacturing ambitions in Queensland.

The agreement is subject to further negotiation.

SGM shares were trading 3.82% lower at AUD 15.48 per share as of 31 July 2025.