Glencore To Buy 30 Percent Of Alunorte From Norsk Hydro For US$700 Million

Glencore To Buy 30 Percent Of Alunorte From Norsk Hydro For US$700 Million

Norwegian aluminium producer Norsk Hydro ASA announced this week that it will sell 30 percent of Alunorte alumina refinery and 5 percent of MRN bauxite mine to Swiss miner Glencore plc.

Per Glencore, the consideration on the sale should be in the neighborhood of US$700 million of equity when it closes this spring. Glencore will receive an offtake of aluminium at a similar value.

Robin Scheiner, head of alumina and aluminium at Glencore, said in a press release that the move met several of the firm’s aims.

“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.”

The enterprise value of the transaction is estimated at US$1.11 billion, excluding a net debt of US$335 million. Adjustments to the deal are expected to occur after the closing as well.

Upon completion, Hydro will hold a 62 percent share of the alumina refinery, Glencore will own 30 percent, and four other stakeholders will together hold the remaining 8 percent.

Per Norsk Hydro’s CEO Hilde Merete Aasheim, proceeds from the sale are earmarked for strategic growth and distribution to its shareholders.

Norsk Hydro’s Alunorte alumina refinery is the biggest refinery of the aluminium precursor outside the People’s Republic of China. It’s nameplate capacity currently sits at 6.3 million metric tons per annum.

Currently the alumina refinery is in the process of a US$258 million project to transition from heavy fuel oil to natural gas. Hydro expects that the change, which is projected to cut carbon emissions at the plant by 700 thousand metric tons, should be complete by the latter half of this year.