Glencore PLC on Friday said it has reached an agreement with Norsk Hydro ASA to acquire in Brazil a 30% equity stake in Alunorte SA and a 45% interest in Mineracao Rio do Norte SA for a combined $775 million.
The Anglo-Swiss miner and commodities trader said the $775 million equity value is based on an agreed proportionate look-through enterprise value and a net debt of $335 million in the business as at March 31.
The transaction has an effective date of June 30 and includes some post-closing adjustments, based on the performance of Alunorte over a 21-month period from June 30.
Total payment on completion, including earn-in and other adjustments, is expected to be $700 million, Glencore said. Completion is expected to occur in in the second half of 2023.
Conclusion of the deal is conditional on, without limitation, customary regulatory approvals.
Oslo-based Norsk Hydro is an aluminium and renewable energy company. Alunorte is an alumina refinery plant that produces alumina from bauxite ore located in Barcarena, Brazil, while Mineracao Rio do Norte is a bauxite miner based in Brazil.
On completion of the transaction, Glencore will become party to the Alunorte joint venture with Hydro and other minority shareholders
Glencore will also become party to the Mineracao Rio do Norte joint venture with the other existing shareholders, being South32 Ltd, Rio Tinto PLC and Companhia Brasileira de Aluminio.
In addition, Glencore will have offtake rights for life of mine in respect of its pro rata share of the production from both Alunorte and Mineracao Rio do Norte.
‘The purchase of the equity stakes in Alunorte and MRN provide Glencore with exposure to lower-quartile carbon alumina and bauxite, enhancing our capability to supply such critical material for the ongoing energy transition to our customers. Both Alunorte and MRN produce high-quality products, which should support particularly our marketing activities across the Atlantic basin,’ said Robin Scheiner, head of alumina and aluminium at Glencore.
Commented Norsk Hydro Chief Executive Officer Hilde Merete Aasheim: ‘This transaction is an important step to deliver on Hydro’s strategy. Proceeds from the transaction will be used for strategic growth and for shareholder distribution. Alunorte remains a core strategic asset for Hydro and is a key source of low-carbon alumina supply to our primary aluminum smelters. Hydro will continue to be long alumina, but now more balanced in relation to the demand from our aluminium smelter portfolio.’
Copyright 2023 Alliance News Ltd. All Rights Reserved.
