en.Wedoany.com Reported - Australian mining company South32 (ASX: S32) has agreed to sell the majority of its aluminum asset portfolio to U.S. aluminum producer Alcoa (NYSE: AA, ASX: AAI) in a deal valued at up to $5.6 billion.
South32 announced it has entered into a binding conditional agreement to sell assets including Worsley Alumina (86% stake), South Africa's Hillside Aluminium (100% stake), and interests in Brazil's MRN bauxite mine (33% stake), an alumina refinery (36% stake), and an aluminum smelter (40% stake). The Mozal Aluminium operation in Mozambique, currently under care and maintenance, is not included in this transaction, but South32 is still actively considering its sale.
As consideration, Alcoa will pay $3.1 billion in cash and $1 billion in stock (approximately 6% of its outstanding shares) as an upfront payment. Additionally, Alcoa will assume approximately $750 million in liabilities related to the acquired assets and may pay up to an additional $750 million by 2030, depending on future aluminum price trends.
Following the announcement, Alcoa's shares fell about 2% in after-hours trading to just over $51 per share, giving the company a market capitalization of approximately $13.75 billion. Earlier this month, the stock hit a four-year high of $84.38, driven by rising aluminum prices fueled by the U.S.-Iran war. South32 also fell 2% after the opening of the Australian stock market, with a market capitalization of about A$17.5 billion.
South32 stated that the sale of its aluminum assets will allow the company to streamline operations and focus on "high-margin copper, zinc, silver, and lead businesses," while maintaining its position as a major manganese producer. The announcement comes as Matthew Daley officially succeeds Graham Kerr as the group's new CEO and Managing Director. Outgoing CEO Kerr said the deal will unlock significant value for shareholders and reposition South32 as a leading upstream base metals company characterized by high-margin assets and transformational growth. New CEO Daley noted that upon completion of the transaction, the company's portfolio will focus on high-quality, long-life assets, with approximately 85% of pro forma EBITDA expected to come from base and precious metals.
South32 also expects to reduce administrative expenses by $125 million annually through the implementation of a new support structure. In the coming years, the company anticipates a production increase of about 55% at its Taylor zinc-lead-silver project in Arizona and plans to expand the Sierra Gorda copper mine in Chile.
For Alcoa, the transaction will add a portfolio of high-quality, low-cost, and globally diversified mining, refining, and smelting assets. The company estimates these assets are expected to generate approximately $900 million in net present value synergies. Alcoa President and CEO William Oplinger said these high-quality, globally relevant assets have a strong strategic fit within Alcoa's portfolio. Alcoa currently holds interests in seven mines worldwide, including the Huntly mine in Australia, which is the world's largest bauxite mine.
