The Norwegian company Norsk Hydro ASA, the world's third largest aluminum supplier, announced today, in Oslo, Norway, the signing of a share exchange agreement with the Brazilian company Vale, with which it has maintained a partnership for almost 40 years. The operation includes the transfer of control of Paragominas, one of the largest bauxite mines in the world, 91% interest in the Alunorte alumina refinery, 51% in the Albras aluminum plant and 81% in the future CAP alumina refinery. With this agreement, Hydro, which already held a 34% stake in Alunorte and 20% in CAP, ensures the supply of bauxite for its production for the next 100 years and consolidates its partnership with Vale in the Brazilian market.
& nbsp; Vale, with this operation, will transfer to Hydro 60% of its stake in Paragominas, 57% of Alunorte, 51% of Albra and 61% of the project of the future CAP alumina refinery, receiving in return US $ 1.1 billion in cash and 22% of Hydro's common shares, Hydro will also assume a net debt of $ 700 million. Before the transaction, Hydro already held 34% of Alunorte and 20% in CAP.
Hydro now has the right to acquire the remaining 40% of Paragominas' capital in two installments, in 2013 and 2015 respectively, against a payment of US $ 200 million each installment. In total, about 3,600 Vale employees will be taken over by Hydro with the transaction, representing a significant contribution of competence, knowledge and talent in the bauxite, alumina and aluminum operations. & Nbsp;
Vale will not be able to increase its participation in Hydro beyond this percentage, and will maintain its participation for at least two years. After this period, it undertakes not to sell shares that total more than 10% of the company's capital to any buyers, individual or group. Part of the company's operation and future investments in Brazil will be financed by a new capital contribution to be announced by Hydro.
The technical details of the agreement are subject to approval by the shareholders' meeting of Hydro, the permission of the partners in the joint ventures negotiated with Vale, as well as regulatory approvals related to the operation. Even so, Hydro considers that the regulatory risks associated with the transaction are limited.
The conclusion of this transaction with Vale is expected for the last quarter of 2010.
“This agreement takes Hydro to a new level in the global aluminum industry scenario”, celebrates Svein Richard Brandtzaeg, president and CEO of Hydro. “The operation will ensure the supply of bauxite and alumina for our operations, significantly improving our competitiveness and making us financially more robust and better positioned to grow, both internationally and in Norway. Vale is highly respected for its social and environmental concern and its commitment to transforming mineral resources into sustainable development, and Hydro will continue to grow while maintaining these standards, ”he says.
Paragominas is the third largest bauxite mine in the world, with a production capacity of around 9.9 million tons per year. The expansion project planned to meet the demand of the future CAP refinery will increase this capacity to 15 million tons.
Alunorte is the largest alumina refinery in the world, with an annual production capacity of 6.3 million. Hydro already held 34% of Alunorte and will increase its participation to 91% with this operation.
Albras is an aluminum factory that operates with hydroelectric energy, with an annual capacity of 455 thousand tons. With the announced transaction, Hydro will hold 51% of the shares.
Other exploration licenses & nbsp; bauxite from Vale are also part of the negotiation, in addition to the purchase guarantee of almost all the bauxite production to which Vale is entitled in MRN, a company whose shareholding in & nbsp; Hydro is 5%. The portfolio of alumina sales contracts was also included.
The CAP project is an alumina refinery under implementation, with an annual production capacity of 1.86 million tons and an expansion potential of up to 7.4 million tons, supplied mainly by Paragominas. Hydro already held 20% & nbsp; CAP, and will control 81% with this operation.
Hydro, a global supplier of aluminum and aluminum products, is a Norwegian company founded in 1905 and is present in 40 countries on five continents. With 19 thousand employees, in 2009, its turnover was 67.409 billion Norwegian kroner.
With over 85 years of experience as a producer of light metals, Hydro produces alumina in Brazil and Jamaica and produces aluminum in: Australia, Canada, Germany, Norway and Slovakia. It is the world leader in the metal recycling segment and Norway's second largest hydropower producer, with 17 plants in the country and a total production of 7.897 GWh.
Hydro also opened on April 12 the largest aluminum plant built in a single step, in a joint venture with Qatar Petroleum. The industry, with a capacity to produce 600 thousand tons per year that can reach 1.2 million tons, will mainly meet the demand of the growing markets in Asia, the Middle East and the United States and had investments of US $ 5.6 billion. & nbsp;
The company has been in Brazil for almost 40 years and in addition to partnerships with Vale since 1974, it maintains a factory in Itu (SP), where it develops precision tubes for refrigeration, construction systems and aluminum solutions for the automotive industry, in addition to aluminum recycling operation.