Rio Tinto Alcan (RTA) is to dispose of its aluminium metal matrix composites technology.
The aluminium manufacturer has signed a letter of intent with Cymat Technologies for it to acquire RTA’s technology and to manufacture its aluminium metal matrix composites (MMC).
The transfer of RTA's customers for the product will also be facilitated, the letter says.
MMC is a ceramic particle-infused aluminium used in the automotive and rail industries for lightweight components requiring extreme wear-resistance.
RTA has manufactured and sold its MMCs for more than 40 years. It decided to exit the business due to a strategic reorganisation.
As the only major supplier of this proprietary MMC in the world, RTA is seeking a smooth and un-interrupted transition of this business for its long-standing customers.
Cymat utilises this product as its primary input material to produce stabilised aluminium foam (SAF).
Its familiarity with the material makes Cymat well qualified and uniquely positioned to take on this business line.
Cymat intends to establish MMC production capability in its Mississauga, Canada plant.
Given the similarities and common skill sets required to produce MMC with its own SAF product, Cymat will have the ability to use its existing workforce, engineering, and support services to produce the MMC.
Cymat said that from a financial perspective, historical sales volumes provided by RTA suggest it could make annual revenue in the range of $7.5 million to $10 million.
While the exact cost of the technology and know-how transfer has not yet been finalised, Cymat expects it to fall within the low to mid-six-figure range.
The initiative will be funded through a combination of proceeds from outstanding warrants and equipment financing.
Cymat expects the new production line to be fully commissioned and operational by the end of the current fiscal year.