By Nick Toscano
Mining giant Rio Tinto has raised its bet on the accelerating clean energy transition lifting the world’s appetite for recycled aluminium, signing a $1 billion deal to buy half of a Canadian metal-recycling business.
Rio Tinto, the second-largest Australian miner, told investors on Monday it had reached an agreement with Ontario-based Giampaolo Group to buy a 50 per cent equity interest in its wholly owned Metalco business for $US700 million ($1.04 billion).
Prime Minister Anthony Albanese at a tour of Rio Tinto’s Yarwun alumina refinery near Gladstone.Credit: AAP
Aluminium is considered one of the essential metals needed to decarbonise the economy and arrest the worsening climate crisis because of its wide use in solar panels, wind turbines and electric cars. However, the process of producing aluminium requires vast amounts of electricity and is a major driver of global warming, accounting for about 3 per cent of the word’s carbon dioxide emissions.
Rio Tinto’s deal with Giampaolo, which is subject to regulatory clearance, comes as the mining heavyweight looks to accelerate efforts to slash the significant carbon footprint of its emissions-intense alumina and aluminium businesses, and boost its ability to offer lower-carbon products to meet the needs of increasingly carbon-conscious customers.
Matalco operates six facilities in the United States and one in Canada, with the capacity to produce approximately 900,000 tonnes of recycled aluminium a year.
Rio Tinto expects US demand for recycled aluminium to grow by more than 50 per cent over the next five years and overtake demand for primary aluminium.
“Investing in recycling is part of our drive to find better ways to deliver the low-carbon materials the world needs and provides a natural extension of our industry-leading primary aluminium business,” Rio Tinto chief executive Jakob Stausholm said.
For Rio Tinto, which earns most of its money from mining the steel-making material iron ore in Western Australia’s Pilbara, the large carbon footprint from its alumina and aluminium looms as one of the biggest challenges to its target of halving its direct emissions by 2030 and reaching “net-zero” emissions – removing as much carbon dioxide from the atmosphere as it emits – by 2050.
Elsewhere in Rio Tinto’s operations, the company uses hydroelectricity dams in Canada to make low-carbon aluminium, and it is seeking to scale up its production of a niche zero-carbon aluminium smelting technology through its ELYSIS joint venture with Alcoa.
Its refineries in smelters in Queensland, NSW and Tasmania, however, are major energy users and rank among the biggest industrial polluters to be captured by the federal government’s signature emissions policy, the safeguard mechanism, which came into effect on July 1.
On Monday, Giampaolo chief executive Chris Galifi said the partnership with Rio Tinto would combine his company’s expertise in the recycling value chain with miner’s record of innovation in the primary aluminium industry.
“I am delighted to partner with Rio Tinto, a leader in the global aluminium industry,” Galifi said.
“We have steadily invested within the recycling supply chain and have grown the Matalco business over the past 18 years, based on our strategy focusing on a circular economy, and are extremely proud of the high-quality, low-carbon products we produce.”
Established in 2005, Matalco is a leading producer of recycled aluminium billet and slab, employing more than 650 people.
Rio Tinto’s agreement to buy 50 per cent of Metalco is expected to be completed in the first half of 2024.
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