Hydro, a global aluminum company, has finalized a significant transaction with Glencore, marking a new chapter in the alumina and bauxite industry. The deal, valued at US$1.11 billion, involves the sale of Hydro’s 30 percent stake in the Brazilian alumina refinery Hydro Alunorte and a 5 percent interest in the bauxite producer Mineracão Rio do Norte (MRN), alongside Vale’s 40 percent share in MRN.
Hilde Merete Aasheim, President and CEO of Hydro, expressed optimism about the partnership with Glencore, highlighting their industrial experience in metals and mining.
“We are looking forward to work with Glencore to further develop Alunorte. Glencore has broad industrial experience within metals and mining, which adds to the significant progress our bauxite and alumina area has made to bring down the footprint of alumina production. This enables Hydro to strengthen our position in low-carbon aluminium.”
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.
Aasheim emphasized the strategic importance 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 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.
