Hindalco Said to Soon Sell Brazilian Assets

Hindalco Said to Soon Sell Brazilian Assets
Sunrise in Rio de Janeiro with Sugarloaf Mountain, seen from Tijuca Park. Source: Wikimedia

According to sources close to the firm, India’s Hindalco Industries is planning to shed its alumina assets and bauxite mines in Brazil. The sources indicate that commodity prices are prompting the move.

The sources, who spoke to Indian media on condition of anonymity, indicate that the proceeds of the sale would be used towards debt reduction and in re-focusing the business on the Indian market, where demand is growing despite alleged flooding from the People’s Republic of China.

Hindalco is said to be close to choosing an investment banker to shepherd the deal, which could net between US$90 million and US$100 million. The firm has mining rights in up to fifty million metric tons of bauxite in Brazil, as well as an alumina refinery with a nameplate capacity of 145,000 metric tons per year. Hindalco’s assets in that country are all held by its wholly-owned subsidiary AV Minerals, which is based in the Netherlands.

Should the rumors prove to be true, Hindalco would join a growing list of metals companies that have sold assets in the course of the global commodities crunch. Vale, Anglo American, Freeport-McMoRan, and Barrick Gold have all cashed out a portion of their asset base to remain competitive.

“We are looking at all non-core operations which normally are very small and don’t fit in,” said company spokesperson in response to the referenced sale rumors. The representative did not go into further detail regarding sales that may or may not be in process.

“The short term outlook is challenging given the structural oversupply and depressed pricing scenario. The sharp increase in imports will continue to impact sales,” said Chairman Kumar Mangalam Birla on Wednesday at the firm’s yearly general meeting. He went on to say that, though short-term outlooks are less than rosy, domestic demand is expected to remain strong, and his firm continues to identify ways to improve infrastructure and foster industrial growth.