Constellium, UACJ to Grow US Automotive Sheet Aluminium Joint Venture

Constellium, UACJ to Grow US Automotive Sheet Aluminium Joint Venture
Constellium site of Steg, view from the Lötschberg railway line. Source: Wikimedia

Dutch aluminium semi producer Constellium N.V. announced on Thursday announced a Memorandum of Understanding (MoU) with its Japanese partner UACJ Corporation (UACJ) to enhance the joint venture already in existence between them by making Body-in-White (BiW) sheet in the United States. The agreement is pending the approval of both firms’ boards of directors.

Per the terms of the agreement, Constellium and UACJ plan to jointly invest in two already planned 100,000-metric-ton finishing lines. The new lines will be funded 51% by Constellium and 49% by Tri-Arrows Aluminium Holdings, a US affiliate of UACJ. This agreement allows Constellium to reduce the investment estimated it would need in its US BiW for the year by almost half, from US$620 million to US$340 million.

“We are delighted to strengthen our successful partnership with UACJ,” said CEO of Constellium Pierre Vareille. “We are fully committed to our BiW strategy and well placed to execute it. This agreement supports our strategic objective of expanding Constellium’s BiW industrial footprint in North America to serve our automotive customers while reducing the capital needed for this project. This partnership positions the joint venture as a leader in the fast expanding North American market.”

The Constellium/UACJ joint venture has already funded the first finishing line, located in Bowling Green, Kentucky. The new line is expected to begin pre-qualification production mid-2016, followed by ramp-up in 2017.

Any further elaboration on the project by Constellium will not happen until Tuesday’s earnings call.

Constellium, based in Amsterdam, was founded in 2011 when Anglo-Australian mining giant Rio Tinto sold Alcan Engineered Products to Apollo Management (51%) and FSI (10%). The firm produces rolled and extruded aluminium products from various alloys. The firm brought in €3.7 billion of revenue in 2014.

UACJ began in 2013 when Japan’s Furukawa-Sky Aluminum and Sumitomo Light Metal Industries integrated their business operations.