Glencore said it has reached a binding agreement with Norsk Hydro ASA, one of the world’s leading low-carbon aluminum companies, to acquire a 30% equity stake in Alunorte S.A. and a 45% equity stake in Mineracão Rio do Norte S.A. (MRN).
Glencore is acquiring these non-controlling stakes for a combined equity value of about $775 million, basis an agreed proportionate look through Enterprise Value and net debt of $335 million in the business as of March 31, 2023. The transaction has an effective date of June 30, 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. $700 million. Completion is expected to occur in H2 2023.
“The growing decarbonization trend is driving demand for primary aluminum as a strong, lightweight manufacturing metal,” Robin Scheiner, head of alumina and aluminium for Glencore 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.”
Located in Bacarena, Para, Brazil, Alunorte is the world’s largest alumina refinery outside China. It began operations in 1995 and has about 2,200 permanent employees. It has a nameplate capacity and currently operating at about 6.3 million metric tons per year (mt/y), and is looking to expand in the future. It is ASI certified and the only refinery in the world to have obtained the ISO55001/2014 asset management certification, in addition to other ISO and SA certifications. As well as being amongst the lowest cost refineries in the world, Alunorte is 1st quartile with respect to carbon emissions with a clear plan to be 1st decile by 2025, driven by a change in fuel consumption and the roll-out of electrical boilers.
MRN is an open-cast, high-quality, low-cost bauxite mine located in Trombetas, Brazil. Alunorte is one of the biggest consumers of MRN bauxite. MRN has an annual production capacity of c. 12.5 million mt/y of bauxite and nearly 1,300 permanent employees. It is a leader in Brazil in sustainable mining and one of the largest socio-economic contributors in the region. It began extracting bauxite in 1979 and has an independent management team that reports to the board.
On completion of the transaction, which is conditional on customary regulatory approvals, 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 owned by Hydro.