AL Circle's weekly wrap
Alcoa secures future as top alumina producer with new agreement
On February 25, Alcoa announced a new agreement with Alumina Limited regarding acquiring Alumina Limited, pending the finalization of a scheme implementation agreement. The companies have signed an exclusivity and transaction process deed with Alumina Limited's Board of Directors indicating its intent to recommend the transaction to shareholders.
About the agreement
In this all-scrip (all-stock) deal, Alumina Limited shareholders are set to receive 0.02854 shares of Alcoa for each share of Alumina Limited they own, as per the "Agreed Ratio." As of Alcoa's closing share price on February 23, 2024, this ratio suggests an equity valuation of approximately $2.2 billion for Alumina Limited.
The Board of Directors of Alumina Limited plans to recommend the Agreed Ratio to its shareholders, provided there is no superior proposal and subject to an independent expert's ongoing assessment that the transaction serves the best interests of Alumina Limited shareholders.
As the Process Deed outlines, Alcoa and Alumina Limited aim to finalize and execute a scheme implementation agreement for the all-scrip transaction (the "Agreement"). Upon the Agreement's completion, Alumina Limited shareholders would hold a 31.25 per cent stake, while Alcoa shareholders would hold a 68.75 per cent stake in the combined company.
Conditional Share Sale Agreement with Allan Gray Australia
Alumina Limited's largest shareholder, Allan Gray Australia, has reached an agreement with Alcoa granting Alcoa the option to purchase up to 19.9 per cent of Alumina Limited at the Agreed Price of 0.02854 Alcoa shares for each Alumina Limited share. This conditional share sale agreement will be disclosed in a substantial holder notice to be released to the ASX.
Alcoa operates Alcoa World Alumina and Chemicals (AWAC)
Alcoa operates Alcoa World Alumina and Chemicals (AWAC), a joint venture (JV) with Alumina Limited as its sole operator. AWAC includes affiliated entities in bauxite mines and alumina refineries across Australia, Brazil, Spain, Saudi Arabia, and Guinea. Additionally, AWAC holds a 55 per cent interest in an aluminium smelter in Victoria, Australia. Alcoa directly or indirectly owns 60 per cent of the AWAC entities, with Alumina Limited holding the remaining 40 per cent.
The proposed Agreement aims to enhance Alcoa's economic stake in its core operations and streamline governance by acquiring the minority partner in its AWAC joint venture. This move is designed to provide increased operational flexibility and strategic opportunities.
Furthermore, the Agreement would enable Alumina Limited shareholders to partake in the potential growth of a more robust, well-capitalized company with an expanded and diversified portfolio. Additionally, it offers exposure to Alcoa's upstream aluminium business. Read the full news HERE .
Hindalco’s subsidiary Novelis Inc. proposes Initial Public Offering for common shares in the US
Novelis Inc., headquartered in Atlanta and a subsidiary of Hindalco Industries, has taken a significant step towards an initial public offering (IPO) by submitting a draft registration statement on Form F-1 to the Securities and Exchange Commission (SEC). This confidential submission pertains to the common shares, which are anticipated to be offered by AV Minerals (Netherlands) N.V., the sole shareholder of Novelis and another subsidiary of Hindalco Industries Limited.
Last week, Novelis Inc., a leading provider of low-carbon aluminium solutions and a global player in aluminium rolling and recycling, released its fiscal year 2024 third-quarter results.
Steve Fisher,?the President and CEO of Novelis Inc.,?expressed satisfaction with the substantial year-over-year improvement in adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and adjusted EBITDA per tonne margin. This positive outcome aligns with their expectations of continued margin recovery throughout the fiscal year.
Milestone project: Greenfield rolling and recycling plant
Notably, Novelis is actively involved in constructing a state-of-the-art rolling and recycling plant in Bay Minette, Alabama. This ambitious project is poised to become the first fully integrated aluminium plant built in the United States in nearly four decades, marking a historic milestone for the company. The plant initially aims to produce 600-kilo tonnes of finished goods, catering to the beverage packaging and automotive markets in North America.
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Project capital and progress update
With a high level of project engineering already completed, key equipment and a significant portion of materials already contracted, the total project capital cost is estimated to be $4.1 billion. This colossal investment underscores the magnitude of the project, making it the largest in Novelis' history. The company remains optimistic about completing the public offering after the SEC's review process, contingent upon market conditions.
Future outlook and significance for India's international trade dynamics
In conclusion, Novelis Inc. is navigating a pivotal phase with its proposed IPO and the monumental Bay Minette project. These moves not only bolster Novelis' standing in the aluminium sector but also contribute significantly to India's global trade narrative. As Novelis advances towards a new chapter, the aluminium industry anticipates the positive ramifications of these strategic moves. To have a detailed purview of the entire aluminium industry, please have a look at AL Circle's specially curated report, Global Aluminium Industry Outlook 2024.
AL Biz reveals the top 5 aluminium consumable suppliers of the week
Aluminium, often hailed as the unsung hero of modern materials, holds a pivotal role in shaping our world sustainably. Its lightweight yet robust nature makes it indispensable across various industries, from aerospace to automotive, construction to electronics. Beyond its versatility, aluminium's environmental credentials truly shine.
As the third most abundant element in the Earth's crust, its extraction and recycling processes offer a beacon of sustainability. With the ability to be recycled infinitely without loss of quality, aluminium stands as a champion of circular economy principles, significantly reducing energy consumption and greenhouse gas emissions. This metal empowers innovation and progress and embodies a profound commitment to a greener, more responsible future.
In the realm of aluminium, where adaptability reigns supreme, AL Biz understands the critical role that aluminium plays in meeting the diverse demands of consumers, guaranteeing the production of coveted end products. Boasting an expansive network of over 1800 trusted sellers, AL Biz takes pride in meticulously curating a premier roster of the top five aluminium consumable suppliers.
These carefully selected suppliers make substantial contributions to the industry's advancement and creativity and reinforce AL Biz's standing as a beacon of excellence within the worldwide aluminium marketplace. Read the full news HERE .
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