(Bloomberg) -- Gestamp Automoción SA, a Spanish car parts manufacturer, has acquired a stake in a scrap recycling firm in a bet on booming demand for greener metals.
Gestamp bought a 33.33% stake in privately-held Gescrap Group for an undisclosed sum, according to a regulatory filing Thursday. Half the stake was acquired from a group controlled by Gescrap founder Iñaki Velasco and the other half from the holding family of the billionaire Riberas family, who are also the top holder of Gestamp.
“Our customers are asking that parts manufacturers use steel and aluminium that have the lowest CO2 emissions possible,” Gestamp Chairman Francisco Riberas told Bloomberg News. “Metal scrap will be absolutely essential to that,” Riberas said, adding that the European steel sector will have to commit to Co2 reduction.
The move comes as carmakers take steps to recycle car components amid pressure to reduce emissions. Renault SA is setting up a new unit dedicated to the recycling business, which aims to bring in more than €2.3 billion ($2.2 billion) in sales by 2030, while Stellantis NV aims to use 35% recycled materials in its vehicles by 2027.
Gescrap is a leading European processor of metallic scrap from the automotive industry with operations in countries including the US, Mexico and Brazil. It currently buys around 75% of Gestamp’s metal waste, processes it and resells it to steel manufacturers.
With Thursday’s deal, the car-parts maker aims to expand Gescrap’s offering to other industries while also focusing on scrap from other sectors, such as windmills. Gestamp also plans to help Gescrap focus on higher added value metals, to increase margins, Riberas said.
Financial details, provided by Gestamp Chief Financial Officer Ignacio Mosquera Vázquez, include:
- Gescrap 2021 revenues of €900 million, adjusted earnings before interest, taxes, depreciation and amortization of €55 million
- Gescrap 2021 Ebitda margin 6%
- Gestamp will fully consolidate Gescrap earnings
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