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Norsk Hydro Bids on Rio Tinto’s Icelandic Aluminum Plant
Feb. 26, 2018 02:15PM PST
Norsk Hydro has made a binding offer to buy Rio Tinto’s Icelandic aluminum plant ISAL for $345 million. The deal is expected to be completed in Q2 2018.
Norsk Hydro (OSE:NHY,OTCMKTS:NHYDY) has made a binding offer to buy Rio Tinto’s (NYSE:RIO,LSE:RIO,ASX:RIO) Icelandic aluminum plant ISAL for $345 million.
The offer also includes buying Rio’s 53.3-percent share in Dutch anode plant Aluchemie and its 50-percent share in Swedish aluminum fluoride plant Alufluor.
“The offer demonstrates our strong belief in aluminium, which is seeing the strongest global demand growth among base metals,” said Hydro President and CEO Svein Richard Brandtzæg.
The firm noted that it is interested in acquiring ISAL because it produces 210,000 MT liquid metal and 230,000 MT extrusion ingot, which would strengthen the company’s position as the preferred extrusion ingot supplier in Europe.
The acquisition would also boost the share of Hydro aluminum that is based on renewable energy to over 70 percent.
“This gives us as low a (carbon) footprint as possible and helps our customers who buy aluminum based on whether it is produced by renewable energy,” Hilde Aasheim, head of Hydro’s primary metals division, told Reuters.
ISAL has a long-term hydropower contract expiring in 2036 and has undergone substantial upgrades in recent years, including pot relining, plus a new gas treatment center and casthouse.
The Norwegian aluminum firm said the proposed acquisition will raise its primary aluminum capacity by 210,000 tonnes to 2.4 million tonnes in 2018.
Rio Tinto Aluminium Chief Executive Alf Barrios said, “Hydro has a solid track record in the aluminium industry and is a partner to Rio Tinto in other ventures. ISAL, Aluchemie and Alufluor are a natural fit with Hydro’s portfolio and this transaction should secure the long term future for the sites and continued economic benefit for the wider communities.”
According to Rio Tinto, the deal is expected to close in Q2 after a consultation process with employees, relevant European works councils and other stakeholders.
On Monday (February 26), shares of Norsk Hydro were down 0.21 percent, closing at NOK56.04 in Oslo. Meanwhile, Rio Tinto’s share price was up 1.63 percent, closing at $58.01 in New York.
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.
