Next to a massive mountain of scrap metal bound for Asia at the Port of Long Beach, a hill of what looks like black sand has risen 20 feet high.

That’s the port’s newest export: iron ore.

SA Recycling LLC has been exporting scrap metal to Asia from the port for decades. But scrap supply has fallen as American consumers have been holding on to their old cars and appliances longer than before.

That forced the company, which has two facilities at Terminal Island, one on the L.A. side and the other on the Long Beach side, to look for another commodity to ship. It settled on iron ore – the first time it has been shipped from the port in 40 years.

Last week, SA began loading its third shipment of iron ore – the key ingredient in making steel – on a cargo ship that will deliver it to customers in Asia. It made its first 50,000-ton shipment at the end of March and another earlier last month.

“This was just a logical thing for us,” said Chief Executive George Adams. “We have capacity to spare and scrap metal is down. People aren’t buying new goods the way they used to and they’re not throwing them away like they used to.”

SA’s scrap metal business has fallen 40 percent since 2008 to 2.4 million tons a year. That’s a big setback for the two local ports, too, which count scrap as one of their top bulk exports.

Scrap prices have also dipped for SA, which is headquartered in Orange. (About half the company’s 1,400 employees work in Southern California.) Adams said he currently sells scrap for about $400 a ton, down about 40 percent from a 2008 peak of $680. SA recycling gets the scrap from consumers at local drop-off points and industrial sources.

He buys the ore from mining companies and marks it up for sale to Asian steel makers. His sale price of the ore is about $135 a ton, much lower than scrap.

Looking for ways to expand, he considered a multitude of commodities but landed on iron ore because he had most of the tools in place to bring it to the dock and load it onto ships. He thought he could sell it to the same customers in China, South Korea, Malaysia and Indonesia that buy his scrap, and, indeed, many of his ore customers are the same ones who buy his scrap metal. Once the ore is delivered, companies smelt it to make iron, which can be reprocessed into steel.

Many other commodities the company considered would’ve required greater capital investment and faced more difficult environmental regulatory roadblocks.

“We looked at gravel, wood chips, coal – every bulk commodity you could think of,” he said. “At the end of the day, iron ore was the only one that made sense for us. It’s one of those things where you think, we should have done this three years ago.”

Increasing exports

The addition of the ore shipments comes as ports across the United States are trying to increase exports. It adds to current bulk exports at the ports, which include diesel and jet fuel at the Port of Los Angeles and petroleum products and coal from the Port of Long Beach.

Jock O’Connell, international trade adviser at West L.A. research firm Beacon Economics, said it was a smart move for SA to replace some of its scrap business with ore.

“It’s good that they’re looking for ways to diversify,” he said.

The company sources ore from Utah and Southern California, and it’s looking for mines in Nevada.

Mining in the Southwest was a big business through much of the 20th century but became unprofitable in the 1970s, O’Connell said. Recently, new technology, massive economic growth in the Far East and substantial foreign investment have caused a resurgence.

Don Snyder, director of trade development at the Long Beach port, said the new iron ore shipments would help create jobs not only at the port but at mines across the Southwest.

“There’s a lot of potential in exports,” Snyder said. “It means a lot of mines along the Southwest can be viable businesses again.”

The United States is a relatively minor exporter of iron ore. It exported about 11.8 million metric tons in 2012, a quantity dwarfed by Australia’s 494 million metric tons the same year.

By exporting ore to Asia, SA will be going head to head with Australians, O’Connell noted.

In addition, slowing growth in Asia and continuing sluggishness in Europe might make the iron ore business difficult for SA.

“It’s going to curtail demand for construction, autos and other products that use steel,” he said.

By getting into the ore export business through SA, Long Beach has taken some business from Northern California ports.

Dale Gilbert, chief executive of mining company CML Metals Corp. in Cedar City, Utah, delivered his ore to companies at the ports of Richmond and Stockton until he started selling to SA.

“When I sent the first train to George, he said, ‘Don’t send anymore anywhere else. I want it all,’” said Gilbert, who’d been trying to ship into Long Beach for five years but couldn’t find any buyers there.

CML ships 1.2 million tons a year and plans to get up to 2 million tons by the end of 2013.

But the seas could be choppy for iron ore exports if prices fall significantly below the current $135 a ton. Analysts surveyed by Bloomberg forecast that prices will decline during the next few years, hitting about $100 a ton by 2016, based on an expected falloff in demand and increased mining.

Still, Gilbert is confident in his business.

“We’re aware of what the future looks like,” he said. “We don’t believe the iron ore market’s going to go off the end of a cliff.”

At the dock in Long Beach, a 130-foot crane loads the ore onto a ship that can take 60,000 tons, which SA can load in about three days.

Getting started wasn’t easy. When Adams opened the first rail car full of the inky material, he expected it to spill out on its own. It didn’t budge.

He had to rent a giant blue vibrator, taller than a train, that grabs and shakes the freight cars to loosen the ore. Even with the machine, it took two full days to unload the first 20 cars.

“The first few trains kicked our you-know-what,” he said.

Adams is aware that the market for iron ore might not hold for the long term and iron ore does not completely make up for the drop in the scrap market.

“If it holds for a year or two and goes away, then it goes away, and hopefully scrap comes back,” he said. “It’s always fun to have something new and exciting, something fresh.”