Cymat acquires MMC technology from Rio Tinto Alcan, adding customers, boosting revenues, lowering costs, and expanding into new markets.
Cymat Technologies Ltd. has signed a Letter of Intent (LOI) with Rio Tinto Alcan Inc. (RTA) to acquire the proprietary technology and associated expertise for manufacturing aluminum metal matrix composites (MMC). The agreement also facilitates the transfer of RTA’s existing MMC customer base to Cymat.
MMC is a high-performance material composed of ceramic-infused aluminum known for its extreme durability and lightweight characteristics, making it ideal for use in the automotive and rail sectors. RTA, a long-standing global leader and sole major producer of this specific MMC technology for over four decades, is exiting the business as part of a strategic shift. Their primary focus now is ensuring a smooth transition of the MMC business to a capable successor that can continue to meet the needs of its longstanding clients.
Cymat currently uses RTA’s MMC as a raw material in producing its Stabilized Aluminum Foam (SAF), making the company intimately familiar with the material’s properties and applications. As such, Cymat is in a strong position to assume responsibility for MMC manufacturing and client servicing. The company plans to integrate MMC production into its existing Mississauga facility, leveraging commonalities in production techniques and skill sets between MMC and SAF to optimize efficiency and control costs.
The anticipated capital expenditure for setting up the required production equipment is estimated between $2 million and $2.5 million. Costs associated with transferring the technology and know-how are expected to be in the low to mid six-figure range. Cymat aims to fund this project through a mix of equipment financing and proceeds from outstanding warrants.
According to historical sales figures from RTA, Cymat expects to generate additional annual revenues in the range of $7.5 million to $10 million from the newly acquired MMC business, with margins projected to match or exceed those of its current Alusion™ product line.
This acquisition is expected to yield two key strategic advantages. First, it provides Cymat with a robust and stable revenue stream that is not correlated with its existing markets, thereby improving overall financial predictability. Second, by bringing MMC production in-house, Cymat can reduce the cost of its core raw material, significantly enhancing its competitiveness in price-sensitive markets like automotive and enabling entry into previously unviable high-volume sectors.
Michael Liik, CEO and Chairman of Cymat, described the move as "transformational" for the company. He emphasized that this expansion, alongside anticipated growth in nuclear and military segments, positions Cymat for accelerated profitability. Liik also highlighted that the acquisition fulfills a long-standing company objective to internalize MMC capability while acquiring a solid customer portfolio.
