The Rio Tinto Ltd (ASX: RIO) share price is under the spotlight after revealing an aluminium recycling joint venture for AU$1 billion.
Rio Tinto may be best known for being an iron ore miner, but it’s increasingly focused on growing its exposure to decarbonisation with growth through copper, lithium and now today’s announcement.
Aluminium recycling
Rio Tinto is going to buy a 50% stake in Giampaolo Group’s Metalco business for US$700 million. They are forming a joint venture to manufacture and market recycled aluminium products.
Giampaolo is one of North America’s largest fully-integrated metal management businesses. Matalco is a “leading producer of high-quality recycled aluminium billet and slab products.”
Matalco operates six facilities in the US and one in Canada, with the capacity to produce approximately 900,000 tonnes of recycled aluminium per year.
How will the joint venture operate?
The ASX mining share said that Giampaolo’s Triple M Metal will be responsible for supplying ‘recyclable feed’ to the joint venture, and Rio Tinto will be responsible for sales and marketing.
Rio Tinto said that the joint venture will “enable Rio Tinto to provide a broader range of high-quality and low-carbon, primary, recycled, and blended aluminium products, at a time when customers are looking for solutions to lower their carbon footprint.”
Management commentary
The Rio Tinto CEO Jakob Stausholm said:
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. We look forward to providing customers with aluminium solutions that meet their needs for low-carbon primary and recycled materials in partnership with Giampaolo Group a leader in providing recycled material in North America.
Final thoughts on the Rio Tinto share price
Earlier today I said that it’d better to look at Rio Tinto when the iron ore price has fallen because of how cyclical it is. But, I will point out that the more the company diversifies its earnings away from iron, the less important that iron becomes to the overall picture. I like the moves that Rio Tinto is doing in this regard – at this stage I prefer it to BHP.