- South32 to sell aluminium value chain assets to Alcoa.
- Unlocks and captures value from material synergies from WA alumina.
- Creates leading ASX-listed upstream base metals company.
- Simplified business with US$125M lower annual overhead costs.
South32 (ASX:S32) has signed a binding agreement to sell its aluminium value chain assets to Alcoa Corporation (ASX:AAI) for US$5.6 billion. Alcoa will also assume related rehab provisions of ~US$1.2 billion and acquire South32’s interests in Worsley Alumina (86%), Hillside Aluminium (100%), MRN bauxite mine (33%)2, Brazil Alumina refinery (36%) and Brazil Aluminium smelter (40%) in the bargain.
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The transaction’s implied value of up to US$5.6B comprises US$3.1B in upfront cash consideration, US$1B in Alcoa shares, US$750 million in net debt and lease liabilities and up to US$750M in contingent cash consideration.
“This transaction will unlock significant value for shareholders and repositions South32 as a leading upstream base metals-focused company with high-margin assets and transformational growth,” South32 CEO Graham Kerr said.
“The sale of our aluminium value chain assets to Alcoa for up to US$5.6 billion will deliver significant upfront proceeds while retaining upside to commodity price strength through price-linked consideration.
“This transaction sees us unlock and capture our share of material synergies from combining our respective alumina businesses in Western Australia.”
Alcoa president and CEO, William Oplinger, said the acquisition will add a high-quality, low-cost and globally diversified set of mining, refining and smelting assets, further strengthening Alcoa’s mine-to-metal platform.
“This is exactly the type of opportunity Alcoa is built to execute,” Mr Oplinger said.
“These high-quality, globally relevant assets are a strong strategic fit within our portfolio and align directly with our strengths as a leading pure-play upstream aluminium company.
“With our proven operating model and global capabilities, we are well-positioned to enhance performance, unlock value, and support their long-term success within Alcoa.
“By investing in this opportunity, we are underscoring our commitment to supply security for our customers, strengthening the communities in which we operate, and delivering responsibly produced materials that are essential to the global economy.”
With effect from today, Matthew Daley has commenced as CEO and managing director of South32 as part of the completion of a previously announced CEO transition plan. Mr Kerr stepped down as CEO/MD in June and will continue as a strategic advisor to support engagements related to the transaction.
Mozal Aluminium has been excluded from the transaction and remains on care and maintenance, with divestment under active consideration.
S32 was steady at $3.92, with a market cap of $20.29B before open.
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