Saturday, May 18, 2024

Changing The Landscape

RICH PRUDENCE TRANSFORMS THE SCRAP METAL INDUSTRY

THROUGH TECHNOLOGY AND ESG

Malaysia is the largest exporter of copper granules in the world, accounting for US$400 million
worth of exports in 2020. And Rich Prudence has the capability to help the country increase
the volume and value.

 Scrap metal is big business! According to market research firm, Straits Research, the global metal recycling market was valued at US$229.6 billion in 2021, and is expected to reach US$384 billion by 2030, at a CAGR of 5.85 percent. Malaysia plays a considerable part in this area, particularly in recycling, processing and exporting non-ferrous metals, such as copper. In fact, in 2020, Malaysia exported US$400 million worth of copper granules, all produced from recycling and processing copper scrap.

As a pioneer of the copper recycling and processing industry in Malaysia, Rich Prudence is aiming to make its mark on the wider international market. This is their story.

With more than 40 years of experience, Rich Prudence’s founder and director Datuk Seri Dr R Tamil Chelvam is an established name in the scrap metal business and is moving the industry forward by bringing in the best of the next generation.

The Early Days

The story of Rich Prudence is a story of transformation. It is a story of how one man rose from humble beginnings to the top of the industry, and in doing so is working to future-proof the business and legacy.

The story began in July 2005 when scrap metal veteran Datuk Seri Dr R Tamil Chelvam founded TM Selvam Trading Sdn Bhd as a scrap metal trading company. Recalling his early days, he told International Business Review, “I decided to form my own company because I have been working in the scrap metal business since the 1980s, so I have experience in it.”
And that experience, of course, came in extremely useful for Datuk Seri Dr R Tamil Chelvam, as the scrap metal business in Malaysia is one that is highly competitive and has a high barrier to entry. As such, if one does not have the knowledge, it would be extremely difficult to gain a foothold.

Even for Datuk Seri Dr R Tamil Chelvam, who then had more than two decades of experience, the early days were not easy, particularly when it came to securing funding for his business. Nevertheless, he persevered, and thanks to a reputation for quality and good business practices, TM Selvam Trading Sdn Bhd soon began to gain the attention of some very big players.

One of them was Perodua – Malaysia’s second national car company and, today,
the number one best selling automobile marque in Malaysia. In 2011, TM Selvam Trading Sdn Bhd won the tender to process Perodua’s scrap metal, and soon set up a spin-off company – Aerodua Metal – to handle that. Today, Aerodua processes more than 3,000 tonnes of scrap metal a month – all from Perodua’s manufacturing plant.

By 2014, Datuk Seri Dr R Tamil Chelvam’s name was already one of the most recognised in the Malaysian scrap metal industry. It was then that he decided to shift his focus and move up the value chain, from scrap metal trade to the recycling and processing of scrap metal.
And with that Rich Prudence was formed.

Rich Prudence’s Wealth of Experience

Today, Rich Prudence has established itself as one of the leaders in Malaysia’s scrap metal recycling and processing sector. A position it has managed to cement itself in, owing to its dedication to technological innovation and environmental, social and governance (ESG) principles.

While the company deals with all types of scrap metal, its main focus is on copper. According to Datuk Seri Dr R Tamil Chelvam, this started in 2017 when Rich Prudence secured a contract to process the scrap metal for Kualiti Alam – a subsidiary of Cenviro, which itself is a wholly-owned company of Malaysia’s sovereign wealth fund Khazanah Nasional.

“When we went to Kualiti Alam, they asked us to install a copper crusher machine. So we went to China to purchase the machine. And that was how we started with copper recycling and processing,” he revealed.

By 2020, Datuk Seri Dr R Tamil Chelvam decided to further expand the business. First by purchasing Rich Prudence’s current office and factory space in Jalan Chan Sow Lin in Kuala Lumpur, and then by investing in state-of-the-art equipment, which enables them to crush and process scrap copper into quality copper granules. These are then sold to buyers overseas, particularly in China, Japan, and South Korea, where they are mainly used in manufacturing electronic products.

After more than 40 years in the industry, Datuk Seri Dr R Tamil Chelvam is seeking to nurture the next generation in taking over the mantle. Being such a competitive industry, where leakages of trade secrets and know-how could wreck a company’s prospects, it is highly common for many scrap metal companies to have family members in positions of responsibility, so as to reduce the risks of industrial espionage and defections.

Rich Prudence workers holding up wires and copper cables that are then fed into the copper crushing machine and processed into copper granules, which are then exported to countries like Taiwan and Japan for use in electronics as well as other uses.

At the Heart of Operations

When one visits the Rich Prudence factory area, there are a number of things that will catch the eye. First and foremost is the astonishing neatness of it all. Any preconceived notions or stereotype that the inside of a scrap metal recycling plant would be dirty, messy and haphazardly cluttered flies out of the window as you are greeted by a clean and spacious area, with everything arranged in order.

On one side, there are piles and piles of scrap – telecommunications wires, electricity cables, and other discarded materials from which copper would be extracted. And there, Rich Prudence’s smartly attired factory staff can be seen painstakingly sorting them out.

Then on another side, there is the final product. Gunny sacks of copper granules. And in between is the machine that makes it all happen – Rich Prudence’s state-of-the-art copper crushing machine, which transforms a broken piece of wire into pellets of beautiful, shiny copper.

“Presently, we get most of our source material from Tenaga Nasional Berhad (TNB – Malaysia’s national electricity company) and Telekom Malaysia,” Mutappan revealed. “To get that, we have to tender to buy the scrap from them. What we want is to have a more solidified and permanent relationship with them.”

Rich Prudence Director Mutappan Subramanian next to the company’s state-of-the-art copper crushing machine, which is able to process 50 tonnes of copper granules a day.

He is confident that Rich Prudence can do just that. And with good reason too. As he told International Business Review, “We have the capacity, the technology and the manpower to handle, recycle and process more scrap material. For instance, our copper crushing machine can produce 50 tonnes of copper granules a day.”

And it is not just the volume but the quality of the finished product that has Rich Prudence in the lead. “What we do is to process waste copper and turn it from B-grade to A-grade. And our processed product is sold to countries like Japan and Taiwan, because they have a demand for fine copper granules, which are used in the electrical and electronics industry.” Mutappan beamed proudly.

Incidentally, both Japan and Taiwan are among the world’s largest importers of copper granules. In 2020, Japan imported US$55.5 million worth of copper granules – making it the 3rd largest importer of the product – of which US$39.4 million worth was from Malaysia. Taiwan imported US$44.1 million worth, making it the 5th largest importer, of which Malaysia supplied US$14.9 million worth.

No doubt, Rich Prudence can help Malaysia increase the volume and value of its copper granule exports. Because, not only do they have the capacity and capability to meet the demand for quality copper granules, they are also cognisant of the growing need to adhere to ESG principles.

Focused on ESG

And talking about ESG, this brings us to the second thing one would notice upon stepping foot in the Rich Prudence factory. The remarkable breathability of the air. When one goes into any factory area, one would expect the air to be filled with dust. But this was not the case at Rich Prudence.

When we pointed that out to Mutappan, he happily revealed the reason behind it. “We have a dust collection system that uses a pipe that connects the crusher to a storage tank located on the outside. And this pipe will collect all the dust from the paper during the processing and bring it to the tank. ”And the result? An environment that allows workers to work without having to worry about any effects on their health.

The dust collection system is just but one part of Rich Prudence’s commitment to ESG. Its waste disposal methodology is another. As Mutappan explained, “A lot of the material we receive come with insulated paper, which are oily and contaminated. How we are different is that we will take the paper to be incinerated so that it is

disposed of properly, whereas others in the scrap metal industry would just dump it in the landfill. And that causes more damage to the environment.”

Another thing that makes Rich Prudence stand out from the rest is its focus on its supply chain. “We are very particular on where we get our scrap material from. We buy scrap from Malaysia because the purity of the copper is very high, and that guarantees the quality of our final product. And this is also why we don’t buy scrap from overseas because the purity of the copper is not as good,” Mutappan explained.

And with that, Rich Prudence shows why it is not only a proudly Malaysian company, but also one that does not contribute – in any way – to the foreign waste dumping controversy that has plagued the country in recent years.

Our aim is to take Rich Prudence to become a public-listed company, and by doing so we will be better positioned to show people who we are, what we do and change their minds about the scrap metal industry.”

– Kanapathy Datuk Seri Dr R Tamil Chelvam,
COO of Rich Prudence
“I am pleased to be able to help play a part in moving Rich Prudence, a company that was built by my father,
forward, by ensuring that our accounts and finances are in order so that we are prepared for public listing.”
 
– Privithaa Datuk Seri Dr R Tamil Chelvam,
CFO of Rich Prudence

The Future Direction

One other thing that is of interest to Rich Prudence is the dynamics of its management team. Datuk Seri Tamil Chelvam provides the experience and the expertise, with more than four decades in the business. Mutappan is the driver of the company’s present direction – helping to strengthen and cement its position. And the future growth of the company lies in the hands of Kanapathy – the COO and Datuk Seri Tamil Chelvam’s son.

Despite his youth, Kanapthy is an established hand, having helped his parents in the business since he was in his teens. And working alongside such mentors has given him a head for the industry.

So, what is his vision for Rich Prudence? Simple. To venture beyond Malaysia. As he told International Business Review, “Since Rich Prudence has already captured the Malaysian market, I would like to see it capture the global market as well. I want to expand to countries such as China and India, as I see a lot of potential there. International customers are vital to our expansion, and I want to focus on capturing them.”

And to do that, he aims to further enhance the company’s commitment to technology and ESG. “We have already invested heavily in machinery, such as our copper crushing machine which helps reduce time and increase productivity. Of course, not everything can be done by machines. In this business, we need to have

manpower to help out in the segregation process, and we have achieved that with our quality staff,” he explained. “Ultimately, I want Rich Prudence to be able to demonstrate that we are a sustainable and responsible company. As such, I want to take this company into being part of the United Nations Global Compact (UNGC), which supports companies in aligning their practices to a more sustainable and inclusive future. And with this, we will show our stakeholders – from customers to staff to suppliers – that Rich Prudence is making a difference in the market,” Kanapthy stated firmly.  

The Rich Prudence management and operations staff outside the company’s HQ in Jalan Chan Sow Lin, Kuala Lumpur. On the front row, fourth from the left – Kanapathy Datuk Seri Dr R Tamil Chelvam (COO), Datuk Seri Dr R Tamil Chelvam (Founder and Director), Mutappan Subramanian (Director), and Privithaa Datuk Seri Dr R Tamil Chelvam (CFO).

What next for Rich Prudence? According to Datuk Seri Dr R Tamil Chelvam, the answer lies in taking the company public and getting listed. This will allow Rich Prudence to further cement is reputation and expand its operations and reach. And with Datuk Seri Dr R Tamil Chelvam, Mutappan and Kanapathy leading the way, there is no doubt that the company can and will do just that.

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