South32 has exercised its pre-emptive rights to acquire up to an additional 25% shareholding and related rights in Mozal Aluminium, from MCA Metals.
In doing so it will match a headline purchase price of US$250 million to acquire the interest, taking its ownership of the smelter up to 72.1%1.
Increasing its shareholding lifts its Group wide annualised equity share of aluminium production by 15% (or 145 kt) to 1,138 kt.
The accretive transaction, with an acquisition multiple of 3.6x FY21 EBITDA, will be funded from cash on hand. The Group’s net cash balance at the end of August 2021 was US$553 million.
South32 Chief Executive Officer, Graham Kerr said:
“We have established a long operating track record at the Mozal Aluminiums melter in Mozambique over the past 20 years. During this time, we have formed strong relationships with our workforce, the community, the Mozambican government and other key stakeholders.
“The smelter benefits from access to hydroelectric power and key export markets into Europe. Our investment in the AP3XLE energy efficiency technology is expected to further improve the competitiveness of the smelter, which continues to operate at its technical capacity. The smelter is an important customer for the alumina produced from our Worsley Alumina refinery and the transaction will further integrate that relationship in our supply chain.
“We are pleased to be able to increase our shareholding on value accretive terms, with a transaction that we expect will deliver a strong return for our shareholders. We are also working with our partner at Alumar in Brazil to investigate a restart of the smelter using renewable energy. Both investments are consistent with our strategy to increase our exposure to the base metals required for the critical transition to a low carbon future.”