In a strategic move to cater to the rising demand for sustainable materials in the packaging industry, mining giant Rio Tinto and Giampaolo Group have successfully concluded a transaction to establish the Matalco joint venture.
This collaboration merges the expertise of North America's primary and secondary aluminium producers, aiming to meet the increasing demand from manufacturers for low-carbon materials.
Key investment details unveiled
Following approval from regulatory bodies, Rio Tinto has acquired a 50% equity stake in the Matalco business from Giampaolo Group for a substantial $700m, subject to customary closing adjustments.
The joint venture positions Rio Tinto to offer a comprehensive range of aluminium products, including low-carbon primary aluminium produced with hydropower and a diverse array of recycled aluminium solutions as it begins marketing Matalco products.
Strategic expansion in response to industry projections
The investment strategically expands Rio Tinto’s aluminium business footprint in the United States, responding to projections that demand for recycled aluminium in the US is expected to surge by more than 70% from 2022 to 2032.
This uptick is primarily driven by sectors such as transportation, construction, and notably, the packaging industry.
Concurrently, global recycled aluminium consumption is forecast to grow by more than 60% over the same period, aligning with the global sustainability push.
Matalco's continued operation and growth
Matalco will continue as the operator of the joint venture's six facilities in the United States and its Canadian site. These facilities boast a combined capacity of approximately 900,000 tonnes (t) of recycled aluminium per year.
Notably, Matalco has played a significant role in the closed-loop solutions space, transforming customers' scrap into high-quality aluminium slabs and billets.
In the eight months ending September 2023, Matalco demonstrated robust performance, producing approximately 400,000t of recycled aluminium, with earnings before interest, taxes, depreciation, and amortisation of $165 per tonne.
Over the past five years, Matalco has more than doubled its production capacity. With Rio Tinto and Giampaolo Group collaborating, the focus now shifts to assessing opportunities for further growth in the Matalco business, with an initial emphasis on North America.
Rio Tinto CEO Jakob Stausholm expressed enthusiasm about the venture, stating: “Creating the Matalco joint venture gives Rio Tinto a leading position in the rapidly growing North American recycled aluminium market, allowing us to offer a full complement of low-carbon recycled products.
“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.”
Giampaolo Group CEO Chris Galifi echoed the sentiment, highlighting the commitment to evolving production, “We are thrilled about beginning our partnership with Rio Tinto, on forming a joint venture for Matalco.
“This collaboration showcases our dedication to continuously evolving our production of high-quality, low-carbon aluminium. We look forward to continuing to grow with our new partners while providing products that support sustainability.”
