EGA plans to acquire 80% stake in US recycling company Spectro Alloys

Emirates Global Aluminium's plan to acquire a majority stake in recycling firm Spectro Alloys will give the company a larger presence in the US. Photo: EGA

Emirates Global Aluminium, the UAE’s largest industrial company outside the oil and gas sector, intends to acquire an 80 per cent stake in US firm Spectro Alloys, as it seeks to expand its presence in the American aluminium recycling market.

The deal is expected to close during the third quarter of 2024 and the two companies have signed an equity purchase agreement, EGA said in a statement on Thursday.

Spectro Alloys is a family-owned business and it will retain 20 per cent share of the aluminium recycling company.

The value of the deal was not disclosed.

"Our goal is to grow further in both primary and recycled aluminium to meet the growing global demand for a metal which is essential for our world’s sustainable future," Abdulnasser bin Kalban, chief executive of EGA, said.

"In the US, which is already one of EGA’s largest global markets, this acquisition will significantly grow our business and expand our offering to customers with domestic production."

Minnesota-based Spectro Alloys is already implementing "ambitious expansion plans" and the company will be a "strong platform" for EGA to further develop its recycling business in the US, he added.

The deal comes after EGA in May acquired Germany's speciality foundry Leichtmetall Aluminium from Leichtmetall Holding, a subsidiary of an investment fund managed by Quantum Capital Partners, to expand in Europe's aluminium recycling market.

Last year, EGA also began construction of the UAE’s largest aluminium recycling plant. The facility will process post-consumer aluminium scrap, such as used window frames and pre-consumer aluminium scrap, to make low-carbon aluminium billets.

The UAE is the fifth-biggest producer of aluminium in the world after China, India, Russia and Canada, with Bahrain in sixth position, according to the London-based commodities research firm CRU Group.

Established in 1973 and based in Rosemount, Minnesota, Spectro Alloys is a secondary foundry alloy producer in the US.

The company has a production capacity of about 110,000 tonnes of aluminium ingots per year, with a carbon intensity of less than one tonne of carbon dioxide equivalent per tonne of aluminium produced, according to the statement.

"By becoming part of EGA... we will unlock the next stage of our development in the fast-growing aluminum recycling industry," Luke Palen, president of Spectro Alloys, said.

"In the near term, this will allow us to accelerate our ongoing expansion project. In the long term, this is a big win for the future of aluminum recycling in the US."

The US currently consumes about 4.9 million tonnes of recycled aluminium annually, accounting for half of all aluminium demand in the country and making the US the second-largest recycled aluminium market in the world, according to the statement.

Demand for recycled aluminium in the US is expected to reach some 7.6 million tonnes per year by 2033, according to the CRU group.

EGA sold about 550,000 tonnes of primary aluminium in the US in 2023.

Spectro Alloys currently supplies more than 125 customers, mainly in the Upper Midwest and Texas. Almost half of Spectro Alloys’ production is used in the automotive sector.

Global demand for recycled aluminium is expected to double by 2040, EGA said, citing market analysts.

Recycled aluminium is expected to account for around 60 per cent of the growth in global aluminium supply between now and 2030, and about 70 per cent of supply growth between 2030 and 2040.