Glencore agrees to buy equity stakes in Norsk Hydro's Brazilian assets

Switzerland-based commodity trading and mining company Glencore has reached a binding agreement with Norsk Hydro to acquire a 30% equity stake in Brazilian alumina refinery Alunorte and a 45% equity stake in Brazilian bauxite producer Mineracao Rio do Norte, it said in a statement April 27.

According to the statement, Glencore will acquire both non-controlling stakes for $775 million, basis an agreed proportionate look through enterprise value and a net debt of $335 million in the business as at March 31, 2023.

The company said the transaction has an effective date of June 30, 2023 and includes certain post-closing adjustments, based on the performance of Alunorte over a 21-month period from that time.

Glencore expects the total payment on completion currently to be around $700 million with completion of the transaction expected during the second half of 2023.

The company said that although it will become a party to Alunorte and MRN, it will not be involved in the operation of either asset.

Upon completion of the transaction Glencore will have offtake rights for life of mine in respect of its pro rata share of the production from both Alunorte and MRN.

Glencore said most of the most of the bauxite purchased by Glencore from MRN will be supplied to Alunorte, which currently purchases around 70% of its bauxite requirements from Paragominas, a bauxite mine wholly owned by Hydro.

"The acquisition of the equity stakes in Alunorte and MRN provide Glencore with exposure to lower-quartile carbon alumina and bauxite, enhancing our capability to supply such critical material for the ongoing energy transition to our customers," said Glencore's head of alumina and aluminium Robin Scheiner.

"Both Alunorte and MRN produce high quality products, which should support particularly our marketing activities across the Atlantic basin," he added.

Alunorte is the world's largest alumina refinery outside China and is located at Barcarena in Para state in northern Brazil. While some of the alumina produced at the site is exported, volumes are also supplied to Hydro's part-owned primary aluminium plant Albras Aluminio Brasileiro, also in Barcarena.

MRN in Para state is currently classed as the world's third biggest bauxite mine.

MRN recently produced around 14 million mt/year of bauxite from a total capacity of around 18 million mt/year, according to the company's website.

The other shareholders in the mine are South32, Rio Tinto and Companhia Brasileira de Aluminio.

Platts, part of S&P Global Commodity Insight assessed benchmark Australian alumina steady at $353/mt FOB April 27, but down from $362/mt at the start of the month, with market participants across the spectrum expecting flat demand to cap price gains while prior supply disruptions decelerate the pace of further decline.

Brazilian alumina was assessed at a premium of $25/mt to benchmark Western Australian on an FOB basis April 27, steady on the week but down $5/mt on the month, as market indications moderated after a spike in early April on the back of a prior belt failure at the Alumar alumina refinery in Brazil.