Rio Tinto and Giampaolo Group have completed a transaction to form the Matalco joint venture (earlier post), combining the strengths of North America’s largest primary and secondary aluminum producers to meet the growing demand from manufacturers for low carbon materials.

Following the receipt of all regulatory approvals, Rio Tinto has acquired a 50% equity stake in the Matalco business from Giampaolo Group for $700 million, subject to usual closing adjustments.

As Rio Tinto begins to market Matalco products, Rio Tinto will be able to offer customers a full suite of aluminum products including low-carbon primary aluminum made with hydropower and a diverse portfolio of recycled aluminum solutions.

The investment will expand Rio Tinto’s aluminum business in the US, where demand for recycled aluminum is forecast to increase by more than 70% from 2022 to 2032, driven by the transportation, construction, and packaging sectors. Over the same period, global recycled aluminum consumption is forecast to grow by more than 60%.

Matalco will remain the operator of the joint venture’s six facilities in the United States and its Canadian site, which together have a capacity to produce approximately 900,000 tonnes of recycled aluminum per annum. Matalco will also continue to provide closed-loop solutions to transform customers’ scrap into high-quality aluminum slab and billet.

For the eight-month period ending on 30 September 2023, Matalco produced approximately 400,000 tonnes of recycled aluminum, including 78% billet and 22% slab. For the same period, Matalco generated an EBITDA of $165 per tonne.

Over the last five years, Matalco more than doubled its production capacity. Rio Tinto and Giampaolo Group will be working together to assess opportunities to continue growing the Matalco business and expand output, with an initial focus on North America.