Norsk Hydro ASA has today entered into an agreement to divest its 35 percent interest in the Jamaican bauxite and alumina partnership Alumina Partners of Jamaica (Alpart) to UC Rusal for a cash consideration of NOK 250 million (USD 46 million).
"Hydro acquired Vale's bauxite and alumina operations in Brazil earlier this year, including the word's largest alumina refinery and high-quality bauxite resources, considerably strengthening Hydro' position in the aluminium value chain. Following the acquisition, the 35 percent interest in Alpart is less strategic for Hydro," says Executive Vice President Johnny Undeli, responsible for the Bauxite & Alumina business area in Hydro.
The transaction is expected to be completed in October 2011, and a positive after-tax impact of about NOK 400 million is expected to be recognized in Hydro's Q3 2011 results.
Alpart has a production capacity of around 1.65 million tonnes alumina per year and was established in 1953. Hydro became a 35-percent owner in 1989. Following the deal, Alpart will be 100 percent owned by Rusal. The operations in the bauxite mines and the alumina refinery in Jamaica were curtailed in 2009 due to over-capacity in the alumina market. The plant is still curtailed.
Following the divestment of Alpart, Hydro will have ownership interests in the following bauxite and alumina assets, all located in Brazil:
- 60 percent in the Paragominas bauxite mine with annual capacity of 9.9 million tonnes, increasing to 100 percent ownership in 2015. A planned expansion to supply the CAP alumina refinery will increase Paragominas' capacity to 15 million tonnes.
- 5 percent in the MRN bauxite mine with annual capacity of 18 million tonnes, and volume off-take agreements for Vale's 40 percent ownership interest in the mine.
- 91 percent in the Alunorte alumina refinery with annual capacity of 6.3 million tonnes.
- 81 percent in the CAP alumina refinery project with initial annual capacity of 1.86 million tonnes and expansion potential up to 7.4 million tonnes.
In addition, Hydro has an alumina supply agreement in Australia with Rio Tinto lasting until 2030 for 0.5 million tonnes. The agreement allows for volume increases at different stages during the duration of the contract.
Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management's plans, objectives and strategies for Hydro, such as planned expansions, investments or other projects, (c) targeted production volumes and costs, capacities or rates, start-up costs, cost reductions and profit objectives, (d) various expectations about future developments in Hydro's markets, particularly prices, supply and demand and competition, (e) results of operations, (f) margins, (g) growth rates, (h) risk management, as well as (i) statements preceded by "expected", "scheduled", "targeted", "planned", "proposed", "intended" or similar statements.
Although we believe that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized. Factors that could cause these differences include, but are not limited to: our continued ability to reposition and restructure our upstream and downstream aluminium business; changes in availability and cost of energy and raw materials; global supply and demand for aluminium and aluminium products; world economic growth, including rates of inflation and industrial production; changes in the relative value of currencies and the value of commodity contracts; trends in Hydro's key markets and competition; and legislative, regulatory and political factors.
No assurance can be given that such expectations will prove to have been correct. Hydro disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.