Mining company South32 has agreed to sell its aluminium value chain assets to Alcoa in a deal worth up to $5.6-billion (approximately R91.7-billion).
The agreement includes Hillside Aluminium in South Africa, allowing Alcoa to operate in the country.
It also includes stakes in Worsley Alumina, the MRN bauxite mine in Brazil, the Brazil Alumina refinery and the Brazil aluminium smelter.
Alcoa will also take over rehabilitation liabilities of about US$ 1.2 billion. Mozal Aluminium in Mozambique is not part of the transaction and remains under care and maintenance.
The deal consists of US$ 3.1 billion in cash, US$ 1 billion in Alcoa shares, the assumption of about US$ 750 million in debt and lease liabilities, and up to US$750-million in additional payments linked to future aluminium and alumina prices until 2030.
Repositioning South32
The transaction comes as Matt Daley officially takes over as South32’s chief executive, replacing Graham Kerr, who stepped down on June 30 after leading the company for more than a decade.
Kerr will remain with the business for a short-term period as a strategic adviser to help complete the transaction.
The outgoing Kerr said the sale would unlock significant value for shareholders and reposition South32 as a leading upstream base metals producer.
“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,” said Kerr.
Streamlined business to reduce overhead costs
Daley said the reshaped business would generate about 85% of its EBITDA from base and precious metals, including copper, zinc, silver and lead.
“Our business will be simpler, with a portfolio of higher- margin upstream operations, reduced complexity and greater resilience,” said Daley.
He said the streamlined business would reduce annual overhead costs by about US$125-million once the new operating model is fully implemented. He added that the stronger balance sheet would support investment in growth projects while allowing the company to continue returning cash to shareholders.
Following completion of the deal, South32 plans to return about US$500-million to shareholders through a fully franked special dividend, funded by half of the Alcoa shares it will receive as part of the transaction. The company said additional shareholder returns will be considered later.
- South32 agreed to sell its aluminium value chain assets, including Hillside Aluminium (South Africa) and Brazilian operations, to Alcoa for up to $5.6 billion (approx. R91.7 billion).
- The deal includes $3.1 billion in cash, $1 billion in Alcoa shares, assumption of ~$750 million debt and lease liabilities, and up to $750 million in additional payments tied to future aluminium prices until 2030; Mozal Aluminium in Mozambique is excluded.
- Alcoa will assume around $1.2 billion in rehabilitation liabilities related to the acquired assets.
- The sale coincides with Matt Daley becoming South32’s CEO, with former CEO Graham Kerr staying temporarily as an adviser; Kerr says the deal will unlock shareholder value and refocus South32 on high-margin base metals.
- Post-sale, South32 aims to streamline operations, reduce annual overhead costs by $125 million, generate 85% of EBITDA from base and precious metals, and return approx. $500 million to shareholders via a special dividend.
It also includes stakes in Worsley Alumina, the MRN bauxite mine in Brazil, the Brazil Alumina refinery and the Brazil aluminium smelter.
Alcoa will also take over rehabilitation liabilities of about US$ 1.2 billion. Mozal Aluminium in
Kerr will remain with the business for a short-term period as a strategic adviser to help complete the transaction.
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Daley said the reshaped business would generate about 85% of its EBITDA from base and precious metals, including copper, zinc, silver and lead.
“Our business will be simpler, with a portfolio of higher- margin upstream operations, reduced complexity and greater resilience,” said Daley.
He said the streamlined business would reduce annual overhead costs by about US$125-million once the new operating model is fully implemented. He added that the stronger balance sheet would support investment in growth projects while allowing the company to continue returning cash to shareholders.
