Australian mining giant Rio Tinto and Giampaolo Group have successfully concluded their transaction to establish the Matalco joint venture in a move to address the growing demand from manufacturers for low-carbon materials.
Following the green light from regulatory authorities, Rio Tinto has secured a 50 per cent equity stake in the Matalco business from Giampaolo Group, marking a step forward in the pursuit of sustainable aluminium solutions.
The transaction, valued at $700 million and subject to standard closing adjustments, enables Rio Tinto to broaden its product portfolio by offering customers a comprehensive range of aluminium products.
This includes low-carbon primary aluminium produced with hydropower, coupled with a diverse selection of recycled aluminium solutions, Rio Tinto said in an ASX announcement.
The strategic investment plays a crucial role in expanding Rio Tinto’s aluminium business in the United States, where the demand for recycled aluminium is projected to surge by more than 70 per cent from 2022 to 2032.
This growth is attributed to increasing needs in the transportation, construction, and packaging sectors.
Globally, recycled aluminium consumption is anticipated to witness a growth of over 60 per cent during the same period.
Matalco will continue to operate the joint venture’s six facilities in the United States and its Canadian site, boasting a combined capacity to produce approximately 900,000 tonnes of recycled aluminium annually.
The company will also uphold its commitment to providing closed-loop solutions, transforming customers’ scrap into high-quality aluminium slabs and billet.
For the eight-month period ending on September 30, 2023, Matalco demonstrated its prowess by producing around 400,000 tonnes of recycled aluminium, with 78% comprising billet and 22% slab.
The company generated an EBITDA of $165 per tonne during the same period. Over the last five years, Matalco has effectively doubled its production capacity, attesting to its commitment to sustainable practices.
According to Rio Tinto Chief Executive Jakob Stausholm, the establishment of the Matalco joint venture positions Rio Tinto as a leader in the rapidly expanding North American recycled aluminium market.
“We look forward to working in partnership with Giampaolo Group to support the drive to net zero by expanding recycled production and providing closed-loop recycling solutions to help our customers reduce their carbon footprint,” Stausholm noted.
In response, Giampaolo Group CEO Chris Galifi expressed excitement about partnering with Rio Tinto for the Matalco joint venture.
Galifi emphasised that the collaboration underscores their commitment to advancing the production of high-quality, low-carbon aluminium.
“We look forward to continuing to grow with our new partners while providing products that support sustainability,” the CEO remarked.
Looking ahead, Rio Tinto and Giampaolo Group are set to collaborate closely to identify opportunities for further growth within the Matalco business.
The initial focus will be on expanding operations in North America, laying the groundwork for continued success in the ever-evolving landscape of sustainable aluminium production.
