Yahoo Finance Rio Tinto enters aluminum recycling race through 50% stake in Canada's Matalco
Mining giant Rio Tinto Ltd. has entered the global recycling race for aluminum through a $700-million investment in Brampton, Ont.-based Matalco Inc., as it eyes taking a stake in a market that’s expected to grow substantially in the next decade.
Giampaolo Group Inc.’s Matalco currently runs six recycling facilities in the United States and one in Canada. Matalco will remain the operator of the facilities, while Rio, which will hold a 50 per cent stake in the company, will be in charge of marketing and sales.
Matalco has produced about 400,000 tonnes of recycled aluminum in the eight-month period that ended on Sept. 30, 2023, although it has the capacity to annually produce 900,000 tonnes.
“We believe that recycling will continue to increase and that means that there will be more growth in secondary aluminum than primary aluminum,” Rio Tinto chief executive Jacob Stausholm said. “We want to be a part of that growth as well.”
The demand for recycled aluminum is expected to increase by more than 70 per cent from 2022 to 2032 in the United States due to the transportation, construction and packaging sectors, Rio said in a statement. Globally, the demand is expected to grow by more than 60 per cent during the same period.
The Matalco deal is part of Rio’s goal to make more investments in Canada and meet its climate goals. In September, Stausholm said Canada is a “decade or two” ahead of other western countries when it comes to addressing climate change and he hopes to further invest in the country’s minerals sector as Rio tries to cut its emissions in half by 2030.
Rio dominates aluminum production in the western world, but recycling has never been a part of the company’s “core competence,” Stausholm said. But with this deal and its existing aluminum customer base, it wants to become a key player in the field.
“There are some customers who don’t necessarily need the performance from primary aluminum and, therefore, want to entirely use recyclable,” he said. “So, the way I see it is, this will strengthen our ties with existing customers and open up new customers.”
Producing secondary aluminum is more energy efficient than producing primary aluminum. However, the material loses some of its quality when recycled. As such, Stausholm believes that the way forward is a combination of both.
As an example, he said some parts of a car need primary aluminum, but other parts can use recycled aluminum.
“This would reduce the total carbon emissions of the car,” he said.
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Chris Galifi, chief executive of privately held Giampaolo Group, said he was thrilled to partner with Rio.
“This collaboration showcases our dedication to continuously evolving our production of high-quality, low-carbon aluminum.”
• Email: nkarim@postmedia.com
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