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Agreement to sell aluminium value chain assets to Alcoa

South32 has signed a binding conditional agreement (Agreement) to sell its aluminium value chain assets to Alcoa Corporation (Alcoa) for an implied enterprise value of up to US$5.6B (the Transaction).  Alcoa will also assume related rehabilitation provisions of approximately US$1.2B.

Alcoa will acquire South32’s interests in Worsley Alumina (86%), Hillside Aluminium (100%), MRN bauxite mine (33%) (subject to exercise of pre-emptive rights held by MRN’s partners), Brazil Alumina refinery (36%) and Brazil Aluminium smelter (40%), under the Transaction. 

Mozal Aluminium is excluded from the Transaction and remains on care and maintenance, with divestment under active consideration.    

The Transaction’s implied enterprise value of up to US$5.6B comprises: 

  • US$3.1B in upfront cash consideration;  
  • US$1.0B in Alcoa shares, in the form of ~17.0M Alcoa shares at the 10-day volume weighted average price; 
  • ~US$750M in net debt and lease liabilities to be assumed by Alcoa; and 
  • up to US$750M in contingent cash consideration, linked to alumina and aluminium prices to 2030. 

Graham Kerr, Inaugural South32 CEO said: “This Transaction will unlock significant value for shareholders and repositions South32 as a leading upstream base metals focused company with high-margin assets and transformational growth.”

Matt Daley, South32 CEO, said: “Following completion, our portfolio will be focused on high-quality, long-life assets leveraged to attractive market fundamentals, with approximately 85% of pro-forma EBITDA from base and precious metals.

“Under Alcoa’s ownership, the Assets will be part of a global aluminium value chain business. Together with Alcoa, we are committed to working closely with our people, communities, government and other stakeholders to support a successful ownership transition.”

To ensure that South32 shareholders are properly informed as to the terms of the Transaction, South32 will seek the approval of its shareholders, and intends to include an ordinary resolution on the Transaction in its items of business for its 2026 annual general meeting.

Read the full announcement

Transaction highlights

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Premium value realised for our aluminium value chain

mine truck

Unlocks and captures our share of value from material synergies from Western Australian alumina

s32

Creates an upstream base metals focused company with transformational growth

sustainability

Portfolio of high-quality upstream operations and growth options in favourable jurisdictions

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A simplified business with lower overheads that will deliver ongoing value

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Balance sheet capacity to deliver our most attractive opportunities

About our aluminium value chain assets

 

Worsley Alumina

Worsley Alumina

Western Australia

South32 owns 86 per cent of Worsley Alumina, with 10 per cent held by Japan Alumina Associates (Australia) Pty Ltd and the remaining 4 per cent held by Sojitz Alumina Pty Ltd. Operations began in 1984 and today, it is recognised as one of the largest alumina refineries in the world.

Bauxite is mined near the town of Boddington, 130 kilometres south-east of Perth. It is transported by overland conveyor to the alumina refinery near Collie and turned into alumina powder, before being transported by rail to the Bunbury port.

It is then shipped to smelters around the world, including South32’s Hillside and Mozal aluminium smelters in Southern Africa.

Learn more about Worsley Alumina

Hillside Aluminium

A photo of Aluminium bars produced at hillside aluminium

Hillside Aluminium

South Africa

Hillside Aluminium is the largest aluminium smelter in the southern hemisphere. The smelter is located in Richards Bay in the South African province of KwaZulu-Natal and is 100 per cent owned and operated by South32 with solid metal production capacity of 720kt per year.

The smelter produces aluminium for the domestic and export markets. To support the development of the downstream aluminium industry in South Africa, liquid metal is supplied to Hulamin and other local companies that sell products in the domestic and export markets.

Learn more about Hillside Aluminium

Brazil Alumina

south32 operation

Brazil Alumina

Brazil

Our Brazil Alumina operations are made up of a share in the country’s largest bauxite mine, as well as an alumina refinery.

For more than 40 years bauxite mining has been underway at the Mineração Rio do Norte (MRN) mine, in Porto Trombetas, in northern Brazil.

Our share of the ore produced at the MRN mine is supplied to the Alumar alumina refinery in São Luís, northeastern Brazil, which has been operating since the mid-eighties.

We have a 33 per cent interest in the MRN mine and a 36 per cent share of the alumina refinery.

Learn more about Brazil Alumina

Brazil Aluminium

An aerial shot of the Alumar Aluminium Smelter in Brazil

Brazil Aluminium

Maranhão, Brazil

South32 holds a 40 per cent share in the non-operated Alumar aluminium smelter, which was restarted during FY22 after being on care and maintenance since 2015. Alcoa holds a 60 per cent share.

Our share of production from the Brazil Aluminium smelter is powered by 100 per cent cost efficient renewable power and produces aluminium for the domestic and export markets.

Following the restart, first production was achieved in the June 2022 quarter, with full capacity from the smelter’s three potlines expected to be achieved in Q1 FY24. It has a solid metal production capacity of 447kt per year.

Learn more about Brazil Aluminium

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