Glencore has signed a binding agreement with Norsk Hydro to acquire 30% and 5% stakes from the latter in Brazilian alumina refinery Alunorte and the producing bauxite mine Mineracão Rio do Norte (MRN), respectively.
The Switzerland-based mining company will also buy an additional 40% stake in the bauxite mine, which is currently owned by Vale.
Norsk Hydro said that the 40% stake will be purchased by the company from Vale and then divested to Glencore on a back-to-back basis.
The total net enterprise value of the deals will be $1.11bn, which will be adjusted for the net debt of Alunorte as of 30 June 2023. Net debt for 30% of the alumina refinery as of 31 March 2023, was $335m.
Currently, Glencore expects the total payment on completion, including earn-in and other adjustments, to be around $700m.
Glencore alumina and aluminium head Robin Scheiner said: “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.”
Located in Trombetas, Brazil, Mineracão Rio do Norte is an open cast, low-cost bauxite mine. It has an annual production capacity of about 12.5 million metric tons of bauxite.
Following the closing of the deal, Norsk Hydro will no longer own any interest in the bauxite mine.
Other shareholders in the Brazilian mine joint venture (JV) are South32, Rio Tinto, and Companhia Brasileira de Aluminio.
Upon closing the transaction, Glencore will continue to supply nearly 30% of Alunorte’s long-term bauxite requirements from Mineracão Rio do Norte.
Alunorte is considered to be the world’s largest alumina refinery located outside China. The refinery has an annual nameplate capacity at about 6.3 million tonnes of alumina.
Norsk Hydro will continue as the largest shareholder of Alunorte, upon closing of the deal, with a 62% stake. Glencore will have a 30% stake, while the remaining stake of 8% will be held by four minority shareholders.
Norsk Hydro president and CEO Hilde Aasheim said: “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.”
The transaction, which is subject to customary regulatory approvals, is anticipated to be complete in the second half of 2023. The two deals with Norsk Hydro are inter-conditional, said Glencore.
