Newsworthy

Glass, financial

Strategic Materials seeks Chapter 11 bankruptcy protection

Houston-based Strategic Materials Inc. (SMI) has announced a comprehensive restructuring designed to position the company for long-term growth.

SMI, North America’s largest glass recycler, and certain of its U.S. domestic subsidiaries filed voluntary petitions Dec. 4, 2023, for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas. As of press time, the cases are pending before Judge Christopher M. Lopez and jointly administered under Case No. 23-90907.

The company says it intends to operate without disruption during the restructuring.

SMI’s Canadian and Mexican operating affiliates are not part of the Chapter 11 bankruptcy process.

SMI has more than 40 locations in the U.S. and recycles more than 2 million tons of glass per year, serving end markets that include glass packaging, fiberglass insulation, flat glass, highway safety beads, air-blast abrasives, specialty glass, recycled plastic resins and glass fillers.

The company says it has secured new money commitments of $23 million, subject to court approval, for a debtor-in-possession financing facility from existing lenders to support its business operations. The facility will allow SMI to continue meeting obligations across its enterprise, including to customers, suppliers and employees, while financially restructuring and reorganizing, including deleveraging the balance sheet by more than $300 million. SMI adds that the restructuring will allow the business to grow and operate sustainably and deliver high-quality products while maximizing value for all stakeholders.

SMI has filed certain customary “First Day” motions with the court to ensure operations continue without interruption. All employees will continue to receive pay and benefits, and suppliers of goods and services will be paid, according to the company.

“We play a critical role for the customers and communities we serve,” says Chris Dods, CEO of SMI. “The past several years presented significant operational and financial challenges, requiring a comprehensive restructuring of the balance sheet of the company.

“We are grateful for the demonstration of confidence in our underlying business, represented by substantial new financing committed from the lender group.”

A hearing to consider the adequacy of the disclosure statement, the solicitation and tabulation procedures and confirmation of the plan was scheduled for Jan. 10, according to information available at https://cases.ra.kroll.com/SMI, which is administered by the company’s claims agent, Kroll.

Metals, Mergers & Acquisitions

Giampaolo Group, Rio Tinto close on Matalco transaction

London-based Rio Tinto and the Canada-based Giampaolo Group have completed the transaction announced this summer, with Rio Tinto acquiring a 50 percent equity stake in Matalco for $700 million, thereby combining the strengths of North America’s largest primary and secondary aluminum producers, according to a news release from Rio Tinto.

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

Rio Tinto has a large-scale, vertically integrated aluminum business, operating bauxite mines, alumina refineries and smelters producing aluminum certified as responsible. The Matalco joint venture is its most recent investment to build its supply of low-carbon aluminum in North America, having invested $1.1 billion to expand the use of its AP60 technology at its Arvida aluminum smelter in June 2023 and $29 million to establish new recycling capabilities at the Arvida smelter in August 2022, both in the Saguenay-Lac-Saint-Jean region of Quebec.

Rio Tinto also is working with the governments of Canada and Quebec to deploy Elysis zero-carbon aluminum smelting technology developed in partnership with Alcoa at its Saguenay-Lac-Saint-Jean facilities. With the current development pathway, Elysis aims to have its technology available for installation starting this year and to produce larger volumes of carbon-free aluminum approximately two years later, Rio Tinto says.

The investment in Matalco, which Giampaolo Group established in 2005, expands Rio Tinto’s aluminum business in the U.S., where demand for recycled aluminum is forecast to increase by more than 70 percent from 2022 to 2032, the company says, driven by the transportation, construction and packaging sectors. Over the same period, global recycled aluminum consumption is forecast to grow by more than 60 percent, according to CRU International Ltd. in its long-term outlook for aluminum, published in late 2022.  

Matalco began by producing 6000-series billet and now produces 3000, 5000, 6000 and 7000 billet and slab and offers direct and tolled products. The company employs more than 650 people and operates an extensive logistics network to service its customers. Its primary focus is to supply upstream producers of extruded, forged and rolled products while relying on Triple M Metal to supply recyclable raw material to provide a truly closed-loop solution to its customers.

Matalco will remain the operator of the joint venture’s six facilities in the United States and its Canadian site, which together can produce approximately 900,000 metric tons of recycled aluminum annually. The company also will continue to provide closed-loop solutions to customers.

For the eight months ending Sept. 30, 2023, Matalco produced nearly 400,000 metric tons of recycled aluminum, 78 percent of which was in the form of billet and 22 percent of which was in slab form. The company generated earnings before interest, taxes, depreciation and amortization, or EBITDA, of $165 per metric ton for that period, Rio Tinto says.

Matalco more than doubled its production capacity over the last five years. Rio Tinto and the Giampaolo Group say they will work to assess opportunities to continue to grow the Matalco business and expand the company’s output, with an initial focus on North America.

The Giampaolo Group was founded more than 50 years ago in Toronto and has evolved into a multinational integrated metal company that focuses on harvesting scrap by operating in recycling, manufacturing and information technology asset disposition.

“Creating the Matalco joint venture gives Rio Tinto a leading position in the rapidly growing North American recycled aluminum market, allowing us to offer a full complement of low-carbon recycled products,” Rio Tinto Chief Executive Jakob Stausholm says in the news release announcing the close of the transaction. “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 adds that his company is thrilled to begin its partnership with Rio Tinto by forming a joint venture for Matalco.

“This collaboration showcases our dedication to continuously evolving our production of high-quality, low-carbon aluminum,” Galifi says. “We look forward to continuing to grow with our new partners while providing products that support sustainability.”