Glencore has signed an agreement with Norsk Hydro to acquire its 30% stake in Brazilian alumina refinery Hydro Alunorte and its 5% interest in Mineracão Rio do Norte (MRN), a bauxite producer in Brazil.
The Swiss commodities giant will also acquire a further 40% stake in MRN, which is currently owned by Vale.
Norsk Hydro will purchase the stake from Vale and immediately sell it to Glencore.
Worth a total of $1.11bn, the deals will be adjusted for Alunorte’s net debt of $335m and cover post-closing adjustments depending on its financial performance.
Once these deals are closed, the bauxite agreement between Norsk Hydro and Vale will be discontinued.
Glencore will continue to provide nearly 30% of Alunorte’s long-term bauxite needs from MRN.
Norsk Hydro and Glencore will also continue to reduce Alunorte’s carbon emissions by substituting fuel oil with LNG and by electrifying coal boilers. This is expected to make the company a top low-carbon alumina supplier.
Glencore alumina and aluminium head Robin Scheiner said: “The growing decarbonisation trend is driving demand not only for the mass production of batteries that require the raw materials that Glencore produces but also for primary aluminium as a strong, lightweight manufacturing metal.
“The acquisition of the equity stakes in Alunorte and MRN provides 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. Both Alunorte and MRN produce high-quality products, which should support particularly our marketing activities across the Atlantic basin.”
Upon completion of the deal, Glencore will become the largest shareholder in MRN with a 45% stake.
The remaining 55% will be held between South 32, Rio Tinto and CBA. However, MRN will retain its operational independence.
Norsk Hydro will remain the largest shareholder in Alunorte with a 62% interest.
Glencore will have 30% ownership of the refinery, with the remaining 8% to be owned by four minority shareholders.
The deals await regulatory clearance, with completion anticipated in the second half of this year.
The development comes amid the Swiss company’s bidding battle for Canadian copper and zinc miner Teck Resources.