Glencore to pay Norsk Hydro £562m for Brazilian assets
Norwegian aluminium producer Norsk Hydro will sell a 30 per cent stake in Brazilian alumina refinery Alunorte and a five per cent stake in bauxite producer Mineracao Rio do Norte to Swiss miner and trader Glencore.
Glencore expects to pay about £562m ($700m) for the equity stakes on completion of the deal in the second half of 2023, it said in a separate statement, which will give the miner and trader an offtake of the metal of proportionate value.
Hydro’s share price rose 3.7 per cent earlier this morning, while Glencore’s stock was unchanged from the previous session.
The transaction value is based on a total net enterprise value of $1.11bn, which will be adjusted for net debt of about $335m, and the deal includes certain post-closing adjustments, the companies said.
“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,” said Robin Scheiner, head of alumina and aluminium at Glencore.
Norsk Hydro will use proceeds from the transaction for strategic growth and for shareholder distribution, CEO Hilde Merete Aasheim said.
Growing demand for metals needed for the green energy transition is fuelling a wave of mining industry buyout offers.
The Alunorte refinery, the largest of its kind outside China, transforms bauxite from mines into alumina, the key material used for making aluminium at smelters.
The plant can produce up to 6.3m tonnes of alumina a year.
Hydro last year decided to invest 1.3bn Brazilian reais ($258 million) to replace heavy fuel oil with natural gas at the refinery, aiming to cut its annual CO2 emissions by 700,000 tonnes.
The fuel switch is expected to be finalised by the second half of this year.
After the transactions, Hydro will hold a 62 per cent stake in Alunorte, Glencore 30 per cent and the remaining four minority shareholders will jointly own eight per cent.
Reuters – Victoria Klesty