Alcoa agrees US$2.2bn deal to acquire Alumina Ltd

2024-03-12

Mar. 12, 2024 - Alcoa is set to secure its position as one of the world’s largest alumina and bauxite producers with the US$2.2bn acquisition of Alumina.

The companies have entered into a transaction process and exclusivity deed to finalise the deal which will advance Alcoa’s position as a pure-play upstream aluminium company.

Alumina’s board of directors intends to recommend shareholders agree to the sale and terms. It follow a number of rejected offers from Alcoa.

Alumina owns 40% of Alcoa World Alumina and Chemicals (AWAC), a joint-venture company of which 60% is owned by Alcoa.

Also operated by Alcoa, AWAC consists of a number of affiliated entities that own, operate, or have an interest in mines and refineries in Australia, Brazil, Spain, Saudi Arabia, and Guinea. This includes five of the 20 largest bauxite mines and five of the 20 largest alumina refineries globally (excluding China).

AWAC’s mining operations are strategically located near its refineries and major Atlantic and Pacific markets. Meanwhile, Alcoa’s smelters are well positioned for key markets in North America and Europe.

The acquisition would create a combined company with leading positions across bauxite, alumina and aluminium smelting, and casting. It would also enhance vertical integration across the value chain, with the combined company more able to withstand price changes in the commodity market.

Alcoa also expects the proposed acquisition to better position it to continue its long-term plan of investing in Australian bauxite mining and alumina refining, while increasing its economic interest in its core business, simplifying governance, and enhancing operational flexibility and strategic options.

William F Oplinger, CEO of Alcoa, said: “This acquisition would build on our commitment to Western Australia, and provides significant benefits to employees, customers, host communities, and others who rely on the continuing success of our global business.”

Alcoa shareholders would own 68.75% of the potential combined company, while Alumina shareholders would own the remaining 31.25%.

The proposed acquisition was announced in the wake of a struggling Australian resources market. Two months ago, Alcoa made the decision to close its Kwinana alumina refinery, partly blaming operating costs and current market conditions.