Glencore announced that it has reached a binding agreement with Norsk Hydro , one of the world’s leading low-carbon aluminium companies, to acquire a 30% equity stake in Alunorte and a 45% equity stake in Mineracão Rio do Norte .
Glencore is acquiring these non-controlling stakes for a combined equity value of c. USD 775 million, basis an agreed proportionate look through Enterprise Value and a net debt of USD 335 million in the business as at 31 March 2023. The transaction has an effective date of 30 June 2023 and includes certain post-closing adjustments, based on the performance of Alunorte over a 21-month period from 30 June 2023. The total payment on completion, including earn-in and other adjustments, is currently expected to be c. USD 700 million. Completion is expected to occur in H2 2023.
Completion of the Transaction is conditional on, among others, customary regulatory approvals and the two transactions with Hydro are inter-conditional.
On completion of the Transaction:
- Glencore will become party to the Alunorte joint venture with Hydro and the other minority shareholders
- Glencore will become party to the MRN joint venture with the other existing shareholders, being South32, Rio Tinto and Companhia Brasileira de Aluminio
- Glencore will not be the operator of either asset
- Glencore will have offtake rights for life of mine in respect of its pro rata share of the production from both Alunorte and MRN. Most of the bauxite purchased by Glencore from MRN will be supplied to Alunorte. In addition to the supply of MRN bauxite by Glencore, Alunorte currently purchases approximately 70% of its bauxite requirements from Paragominas, a bauxite mine wholly owned by Hydro
Robin Scheiner, Head of Alumina and Aluminium, Glencore, commented:
“The growing decarbonisation trend is driving demand not only for the mass production of batteries that require the raw materials which Glencore produces, but also for primary aluminium as a strong, lightweight manufacturing metal.
“The acquisition 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.
“We look forward to working with our joint venture partners to further strengthen Alunorte’sposition as a producer of low-carbon alumina.”