With the takeover of Vale’s main activities in bauxite mining, alumina refining and aluminium production in Brazil, Hydro is moving up into the top class of global aluminium companies.
The takeover gives Hydro greater access to alumina, which is the main raw material for the production of primary aluminium, for the next 100 years.After 40 years of cooperation on bauxite extraction and refining, Hydro and Vale are entering a new era, in which Vale will become the second-largest owner in Hydro.
This is what Hydro is receiving from Vale:
- Bauxite extraction – ownership share of 60 in the world’s third-largest bauxite mine, Paragominas, with acquisition of the remaining 40 percent after expansions in 2013 and 2015.
- Alumina refining – increased ownership share from today’s 34 percent to 91 percent in Alunorte, the world’s largest alumina refinery, as well as an 81-percent stake in the CAP refinery project.
- Aluminium production – ownership stake of 51 percent in the Albras aluminium plant, which has an annual production capacity of 460,000 tonnes.
- The takeover adds 3,600 employees to Hydro.
- Hydro will add complementary activities with a lean management organization.
- The acquisition has marginal operational synergies and integration costs.
- All acquired activities will be fully consolidated in Hydro’s accounts.
- Hydro will receive the cash flow from the acquired alumina and aluminium production activities from January 1, 2010.
This is what Vale receives from Hydro:
- Total payment of $4.9 billion, nearly NOK 30 billion, consisting of a 22-percent ownership stake in Hydro, cash payment of about NOK 6 billion and a later settlement of about NOK 2.4 billion with the takeover of the remaining stake in the Paragominas mine in 2013 and 2015.
New business area in Hydro: Bauxite & Alumina
- Led by Johnny Undeli, former head of Hydro’s Extruded Products business area.
- Regional headquarters in Rio de Janeiro.
- Nearly 2,400 employees.
Share issue in Hydro
- Share capital in Hydro will be expanded by NOK 10 billion in a rights issue with expected completion in July 2010.
- Private placement of ownership share of 22 percent to Vale, which will become Hydro’s second-largest owner.
- The Norwegian state’s share in Hydro will be reduced from 43.8 percent to 34.5 percent.
- The Norwegian government pension fund’s stake in Hydro will be reduced from 5.9 percent to 4.5 percent.
- Brazil’s leading industrial conglomerate.
- World’s second-largest mining company and the world’s largest producer of iron ore.
- Publically listed in Brazil and the U.S., with a market capitalization of $160 billion.
- The aluminium activities represented about 8 percent of Vale’s revenues and 3 percent of operating result in 2008.
For more information, see PDF files in the right-hand column