Hydro and Glencore Forge a $1.11 Billion Alumina and Bauxite Powerhouse Deal
In a transformative deal shaping the future of the alumina and bauxite industry, Hydro, a global aluminum giant, has successfully concluded a multimillion-dollar transaction with Glencore. Valued at US$1.11 billion, the deal includes Hydro’s 30 percent stake in the Brazilian alumina refinery, Hydro Alunorte, and a 5 percent interest in bauxite producer Mineracão Rio do Norte (MRN), alongside Vale’s 40 percent share in MRN.
Optimistic Partnership for Progress
Hilde Merete Aasheim, President and CEO of Hydro, expressed optimism about the collaboration with Glencore, citing their extensive industrial expertise in metals and mining. The partnership is poised to advance Alunorte’s carbon reduction initiatives, positioning it as a global leader in low-carbon alumina production by 2025. Aasheim underlined the strategic significance of Alunorte for Hydro.
“This transaction is an important step to deliver on Hydro’s strategy. Alunorte remains a core strategic asset for Hydro and is a key source of low-carbon alumina supply to our primary aluminum smelters.”
The partnership aims to reduce carbon emissions at Alunorte through initiatives like the fuel switch project, substituting fuel oil with LNG, and the electrification of boilers. These efforts are expected to position Alunorte in the top decile globally for low carbon emissions by 2025, enhancing its role as a leading supplier of low-carbon alumina. Additionally, Hydro and Glencore are committed to advancing social projects benefiting nearby communities.
Financial Details and Outlook
The transaction’s total enterprise value stands at US$1.11 billion, adjusted by US$244 million for 30 percent of Alunorte’s net debt and deviations from normalized working capital as of June 30, 2023. The valuation excludes US$40 million in asset retirement obligations on a 30 percent basis. A post-closing price adjustment based on Alunorte’s financial performance is agreed upon, with Hydro expecting to pay a full capped amount of US$55 million in the first quarter of 2024.
Despite the sale, Hydro will continue to consolidate Alunorte in its financial accounts, with no remeasurement or recognized gain from the transaction. Hydro remains the largest shareholder of Alunorte, holding 62 percent, while Glencore now owns 30 percent. The remaining four minority shareholders collectively hold an 8 percent stake.