Majestic Corporation turns waste into profit

Whichever way you look at, mining is a dirty business. Getting mineral resources out of the ground is environmentally challenging and often dangerous work for those at the sometimes-literal coal face. 

And it’s expensive – both building mines and operating them, especially in the current inflationary environment when the costs of the huge amounts of energy needed to power the industry has been rising fast. Mining and refining are estimated to use as much as 8% of global energy supply reflecting soaring global demand for metals, rising 87% to 6bn tonnes a year between 1980 and 2008. 

Unsurprisingly, governments and companies are increasingly recognising the importance of recycling scrap metals, especially when it comes to achieving their Net Zero ambitions. Using recycled material to produce copper, for example, consumes 85% of the energy over producing it from raw materials. 

It’s already a big industry, worth $229.6bn in 2021, but is expected to grow at a CAGR of nearly 6% a year to hit $384bn by 2030 as the battle for mineral resources intensifies in the wake of the Ukraine conflict and environmental regulation is further tightened. 

One company tapping into this burgeoning trend is Majestic Corporation (MCJ), which floated on AQSE in March and operates an international network of facilities recycling mainly non-ferrous metals – including platinum group metals (PGM) from auto catalysts, a mining market dominated by Russia – and electronic goods covered under WEEE Regulations.

Its first results since coming to market are impressive, with profits up almost 28% to $980k despite a drop in revenues as a result of macroeconomic headwinds exacerbated by the conflict in Ukraine. That and other supply chain problems meant limited supplies of materials recycled materials and lower revenues for Majestic, down 16.6% to $12.9m over the year. 

But the company’s focus on risk management, including hedging sales, protected its profitability, despite a significant rise in logistics costs exacerbated by delays to container availability, and staff shortages.

Expansion plans

The company also ended the year with cash on hand up $200k to $2.7m, underpinning its plans to further expand its facilities. The company currently operates two procurement sites in the US and UK supplied by partners in Mexico, Lithuania, Australia and Italy, and a facility in Malaysia capable of processing 20,000 tonnes a year.

It now plans to set up a processing facility in the UK, with long term plans to do the same in Europe and then the US. It’s also investing heavily in its technology infrastructure, in particular building customer-facing apps to help it procure materials and sell recycled products. 

Alongside normalising supply chain issues, that should drive further profit growth as revenues bounce back from this year’s disruption. Meanwhile, expansion of its vertically integrated global footprint should help it capture a bigger slice of the fast-growing metal recycling industry.

Majestic is currently working on its inaugural ESG report. But given the importance of metal recycling, it is already a rare example of a company walking the ESG walking rather than just ticking boxes. Follow | MCJ