EGA Acquires Majority Stake in US Recycling Leader Spectro Alloys

Emirates Global Aluminium (EGA), the largest industrial company in the UAE outside of the oil and gas sector and the world's leading producer of 'premium aluminium,' has announced its plan to acquire a majority stake in the American aluminium recycling firm, Spectro Alloys Corporation.

Expansion into the U.S. Market

The acquisition, which is pending regulatory approval, is a strategic move that will accelerate EGA's global expansion into aluminium recycling. This acquisition will also strengthen EGA's presence in the United States, a key market for aluminium products.

Overview of Spectro Alloys Corporation

Founded in 1973 and based in Rosemount, Minnesota, Spectro Alloys is a leading secondary foundry alloy producer in the United States. The company has a production capacity of approximately 110,000 tonnes per year of aluminium ingots, with a low carbon intensity of less than one tonne of CO2 equivalent per tonne of aluminium produced.

Expansion Project at Rosemount Site

Earlier this year, Spectro Alloys initiated an expansion project at its Rosemount site. This project will add around 55,000 tonnes per year of secondary billet production capacity. The first phase of this expansion is expected to be completed by 2025, further boosting the company's production capabilities.

Acquisition Details

EGA intends to acquire an 80% stake in Spectro Alloys, while the current owner-managers will retain a 20% shareholding. Both companies have signed an equity purchase agreement, and the transaction is anticipated to close in the third quarter of 2024.

EGA's Recent Strategic Moves

This acquisition follows EGA's recent purchase of European speciality foundry Leichtmetall in May, as well as the start of construction on the UAE’s largest aluminium recycling plant late last year. These initiatives underscore EGA's commitment to expanding its aluminium recycling capabilities on a global scale.

Abdulnasser Bin Kalban, Chief Executive Officer of Emirates Global Aluminium, said: “EGA is the biggest ‘premium aluminium’ producer in the world and 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. In the United States, 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. Spectro Alloys has a strong and highly experienced team which is already implementing ambitious expansion plans and will be a strong platform for the further development of an EGA recycling business in the United States. I look forward to working with Spectro Alloys’ team.”

Luke Palen, President of Spectro Alloys, said: “We have grown Spectro Alloys over the last five decades into one of the United States’ top aluminium recycling companies. By becoming part of EGA, the largest ‘premium aluminium’ producer in the world, we will unlock the next stage of our development in the fast-growing aluminium recycling industry. 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 aluminium recycling in the United States.”

U.S. Aluminium Recycling Market

The United States consumes approximately 4.9 million tonnes of recycled aluminium annually, representing half of the country's total aluminium demand. This makes the U.S. the second-largest market for recycled aluminium in the world. According to CRU, demand for recycled aluminium in the U.S. is projected to reach 7.6 million tonnes per year by 2033.

EGA's Market Presence

In 2023, EGA sold around 550,000 tonnes of primary aluminium in the United States, reflecting the importance of the U.S. market to the company's global operations.

Spectro Alloys' Customer Base and Sourcing

Spectro Alloys supplies over 125 customers, primarily in the Upper Midwest and Texas. Nearly half of its production is utilized in the automotive sector, with the remainder serving industries such as small engine manufacturing, construction, and recreational vehicles. The company sources aluminium scrap from more than 250 suppliers in the region and employs advanced sorting and analysis technologies to meet its customers' diverse alloy requirements.

Future Demand for Recycled Aluminium

Market analysts predict that global demand for recycled aluminium will double by 2040. Recycled aluminium is expected to account for approximately 60% of the growth in global aluminium supply by 2030 and around 70% of supply growth between 2030 and 2040.