Norsk Hydro has scrapped a previously announced $345m acquisition of certain aluminium assets of mining giant Rio Tinto in Europe, owing to regulatory uncertainty.
Image: ISAL aluminium plant in Iceland. Photo: courtesy of Norsk Hydro ASA.
The Norwegian aluminium and renewable energy company Norsk Hydro has pulled out from the deal owing to an initial feedback from the European Commission (EC), which hinted at a potential delay in the competition approval process.
As per the deal announced in February 2018, Norsk Hydro proposed to acquire Rio Tinto’s ISAL smelter in Iceland, 53.3% stake in the Aluminium & Chemie Rotterdam (Aluchemie) anode plant in the Netherlands, and also its 50% stake in the Alufluor aluminium fluoride plant in Sweden.
Norsk Hydro, in a statement, said: “The European Commission (EC) competition approval process has taken longer than anticipated and remains outstanding.
“After considering alternative timelines, outcomes and developments, Hydro requested to terminate the transaction and the parties have signed a termination agreement. Hydro has withdrawn its EC competition filing.”
Hydro planned to acquire ISAL to boost its position in Europe as the preferred and leading extrusion ingot supplier. The ISAL smelter has a production capacity of 210,000m liquid metal and a total of 230,000m extrusion ingot.
The acquisition would have helped the Norwegian firm to raise its total capacity in primary aluminium production to 2.4 million mt in 2018 apart from increasing its share of production based on renewable energy to more than 70%.
In the Aluchemie anode plant, Hydro has been a partner to the mining giant through a stake of 46.7%.
The Norwegian company said that it had signed a sale and purchase agreement (SPA) with the mining firm in June after concluding consultations with Rio Tinto employees in both France and the Netherlands.
The acquisition, which was subject to various conditions such as approval from competition authorities, Icelandic governmental authorities and commercial parties, was expected initially to be completed in the second quarter of 2018.
Rio Tinto had agreed to divest the aluminium assets to consolidate its business and deliver value by optimizing its portfolio.