South32 sells its aluminium assets to Alcoa in $8 billion deal
US mining giant Alcoa has announced it will acquire South32’s aluminum assets, including the Worsley Alumina mine near Boddington, Western Australia, for more than $8 billion.
This move aims to solidify Alcoa’s position as a leading pure production aluminum company with an expanded portfolio of world-class bauxite, alumina and aluminum assets.
Under the agreement, Alcoa will acquire South32’s interests in Worsley Alumina (86%), Hillside Aluminum (100%), MRN bauxite mine (33%), Brazil Alumina refinery (36%) and Brazil Alumina smelter (40%).
The announcement comes on the same day that Matt Daley took over from Graham Kerr as South32’s new CEO.
Daley has also moved into the role of chief executive, while Kerr remains at the company as a strategic advisor.
Following the deal, the company’s portfolio will focus on high-quality, long-lived assets that benefit from attractive market fundamentals, he said.
“From this strong platform, our peer-leading, funded growth profile is expected to deliver approximately 55 percent production increases from our Taylor project and Sierra Gorda’s fourth grinding line expansion,” he said.
“Our deep copper and zinc pipeline growth options in the study and exploration phases provide additional advantage.
Daley added that the sale will make South32’s business simpler with a portfolio of higher-margin upstream operations, reduced complexity and greater resilience.
“This will enable a leaner, lower-cost operating model that will deliver ongoing value through an expected $125 million annual reduction in overhead costs as new support structures are put in place,” he said.
“Under Alcoa’s ownership, the assets will become part of a global aluminum value chain business. Together with Alcoa, we are committed to working closely with our employees, communities, government and other stakeholders to support a successful ownership transition.”
Alcoa chairman and CEO William Oplinger said the acquisition is exactly the kind of opportunity the company was designed to realize.
“These high-quality, globally relevant assets provide a strong strategic fit to our portfolio and align directly with our strengths as a leading pure-play aluminum company,” he said.
“With our proven operating model and global capabilities, we are well positioned to drive performance, unlock value and support their long-term success within Alcoa.”
Kerr, South32’s first CEO, said this transaction will unlock significant value for shareholders and reposition the company as a leading upstream base metals-focused company with high-margin assets and transformational growth.
“The sale of our aluminum value chain assets to Alcoa for up to US$5.6 billion will generate significant upfront revenue while maintaining commodity price appreciation through price-linked valuation,” he said.
“This transaction enables us to unlock and achieve our share of material synergies by combining our respective alumina businesses in Western Australia.”
