TORONTO (miningweekly.com) – Primary aluminium producer Norsk Hydro has settled a deal with Brazilian mining company Vale to possibly buy Vale's 40% interest in Brazilian bauxite producer Mineração Rio do Norte (MRN), which would strengthen Hydro's global position as a long-term player in bauxite and alumina.

The Norwegian firm on Friday said an eventual agreement would depend on the parties agreeing terms for Hydro to acquire Vale's 40% interest in MRN, completion of Hydro's due diligence process, approval by the parties' boards and by the relevant competition authorities.

The parties would also seek support from the other MRN shareholders for the transaction and would advance under the terms of the existing shareholders' agreement. Vale currently held a 40% stake in MRN, while Alcoa owned 18.2%, South32 held 14.8%, Rio Tinto held 12%, CBA held 10% and Norsk Hydro 5%.

MRN was situated in the westernmost part of the state of Para, home to Hydro's other Brazilian operations, and was Brazil's, and one of the world's, largest producers of bauxite, a critical ingredient in the aluminium-making process. In operation since 1979, MRN currently employed around 1 400 employees and a significant number of contractors.

Norsk stated that MRN was a well-operated mining operation with a competitive cost position owing to its high-quality bauxite, attractive strip ratio and economy-of-scale benefits through its production of 18-million tonnes a year. In addition to mining licences covering 143 000 ha, operations included mine infrastructure and equipment, the Porto Trombetas township, railway, stockyard, beneficiation plant, tailings disposal system, driers, port and power generation facilities.

Hydro acquired Vale's other Brazilian aluminium assets in 2011. This included the 57% interest in the Alunorte alumina refinery, the Paragominas bauxite mine, a 51% interest in the Albras smelter and a 61% interest in the Companhia de Alumina do Para alumina refinery project, all in Para. The 2011 agreement also included commercial agreements for Vale's bauxite offtake in MRN.