Australian mining giant Rio Tinto and metal management company Giampaolo Group have agreed to establish a joint venture to manufacture and sell goods made of recycled aluminium.
The deal demonstrates the collective commitment of the joint venture partners to satisfy the rising demand for low-carbon aluminium as a crucial commodity in the energy transition, the ASX-listed company revealed in a press release.
As part of the agreement, Rio Tinto will pay $700 million for a 50 per cent equity stake in Giampaolo Group’s fully owned Matalco company, subject to customary closing adjustments.
Matalco, which has six sites in the United States and one in Canada, is a leading manufacturer of high-quality recycled aluminium billet and slab products with a total capacity of 900,000 tonnes of recycled aluminium per year.
The deal will also see Triple M Metal, a Giampaolo Group company, supplying recyclable feed to the joint venture, with Matalco’s leadership team continuing to supervise its operations.
Following the conclusion of the agreement, Rio Tinto will be responsible for Matalco product sales and marketing.
Through an equal representation board, the joint venture partners will give supervision to the Matalco management team on areas such as strategic choices, including executive hires, safety, and ESG standards.
When clients are seeking ways to reduce their carbon footprint, the joint venture will also allow Rio Tinto to provide a wider selection of high-quality and low-carbon, primary, recycled, and mixed aluminium products.
Additionally, the joint venture will expand the range of clients Matalco can serve while assuring access to low-carbon primary metal for its operations.
By 2028, it is anticipated that more than half of the demand in the United States would come from recycled aluminium.
Rio Tinto Chief Executive Jakob Stausholm said the company is looking forward to providing clients with aluminium solutions that meet their needs for low-carbon primary and recycled materials.
“Investing in recycling is part of our drive to find better ways to deliver the low-carbon materials the world needs and provides a natural extension of our industry-leading primary aluminium business,” Stausholm stated.
Chris Galifi, CEO of Giampaolo Group, stated, “I am delighted to partner with Rio Tinto, a leader in the global aluminium industry.”
Giampaolo and Rio Tinto, according to him, have a strong track record of forming profitable partnerships to increase value for clients.
“We look forward to joining forces to combine our complementary expertise in the recycling value chain with their experience and track record of innovation in the primary aluminium industry,” Galifi concluded.
The acquisition is scheduled to close in the first half of 2024, subject to usual regulatory clearances.
