Rio Tinto, Giampaolo Group close on Matalco transaction

London-based Rio Tinto and the Giampaolo Group, based in Canada, have completed the transaction they 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 gas a  large-scale, vertically integrated aluminum business, operating bauxite mines and alumina refineries as well as smelters producing aluminum certified as responsible. The Matalco joint venture is the company’s 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 aluminium smelter in June 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.

RELATED: The future of low-carbon aluminum

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 in 2024 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 in its long-term outlook for aluminum published late last year.  

RELATED: Blending volume with quality

Matalco began by producing 6XXX series billet and now produces 3XXX, 5XXX, 6XXX and 7XXX 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-month period ending Sept. 30, Matalco produced approximately 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 reports.

Matalco more than doubled its production capacity over the last five years, and Rio Tinto and the Giampaolo Group will work to assess opportunities to continue to grow Matalco business and expand its 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 the recycling, manufacturing, and information technology asset disposition space.

“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, “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 aluminum. We look forward to continuing to grow with our new partners while providing products that support sustainability.”