Alcoa agrees to sell majority interest in S Carolina aluminium smelter
TORONTO (miningweekly.com) – Alcoa has agreed to sell its 50.3% stake in the Mt Holly aluminium smelter, in Goose Creek, South Carolina, to its 49.7%-partner Century Aluminium, further trimming its primary aluminium production capacity as part of efforts to establish a low-cost portfolio of smelters.
The US-based integrated aluminium, specialty products manufacturer, which was increasingly strategically focusing on lightweight, specialty alloys for the automotive and aerospace industries, said on Thursday that Century would pay $67.5-million in cash, including an additional potential earn-out.
“While Mt Holly is a strong facility, its cost structure doesn’t match Alcoa’s criteria for a low-cost portfolio of upstream assets. The sale will help achieve Alcoa’s strategy to [improve the efficiency of] its commodity portfolio and protect the facility’s jobs and economic contribution to the local community,” Alcoa Global Primary Products president Bob Wilt explained.
The smelter has the capacity to produce 229 000 metric tons of aluminium a year and employs 500 people who will transition to Century as part of the sale. The current power contract for the site expires in December 2015. The divestiture will reduce Alcoa’s global smelting capacity to 3.5-million tons a year.
The sale was subject to customary regulatory approvals and was expected to close by the end of the fourth quarter. Based on current estimates, the transaction would not result in a significant gain or loss to Alcoa.
The sale was aligned with Alcoa’s strategy to create a globally competitive commodity business and lower its position on the world aluminium production cost curve to the 38th percentile by 2016.
Including this latest announcement, Alcoa had curtailed, closed or sold 1.3-million metric tons, or 31%, of its highest-cost global smelting capacity since 2007.
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