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Norway (10) -- News -- 2010
Norsk Hydro buys assets of Vale
02.05.2010
Norsk Hydro has agreed to buy the aluminium assets of Vale, the Brazilian metals and mining group, in a $4.9 billion deal that will secure the Norwegian company’s raw
material supplies for decades.
The move will give Norsk Hydro control of Paragominas, the world’s third-biggest bauxite mine, as well as Vale’s alumina refining and aluminium production
facilities in Brazil.
Norway (10) -- Analyses -- 2010
More about the deal between Norsk Hydro and Vale
02.05.2010
Norsk Hydro, Europe’s third largest aluminium maker, said the deal would boost its competitiveness by providing a long-term supply of high-quality,
cost-efficient raw materials.
The Oslo-based company, 43.8 per cent owned by the Norwegian government, will pay Vale $1.1bn in cash, with the remainder in new Norsk Hydro shares and $700m of
assumed net debt.
Following completion, Vale will own 22 per cent of Norsk Hydro. The Norwegian government’s stake will fall to 34.5 per cent. Norsk Hydro said it planned to
raise NKr10bn ($1.7bn) in a fully underwritten rights issue to help finance the takeover.
The deal includes Vale’s 91 per cent stake in the Alunorte alumina refinery, the world’s biggest, 51 per cent of the Albras aluminium plant, and 81 per cent of an
alumina refinery under development.
Vale’s decision to sell is at first sight surprising as its bauxite, alumina and aluminium business is its third biggest in terms of revenue, contributing
income of $2.97bn in 2008. But the cost of energy – a major input in aluminium production – is less cheap in Brazil than it used to be in comparison to other countries.
Roger Agnelli, Vale chief executive, has complained repeatedly in public about rising energy costs.
Vale and Norsk Hydro have operated together in aluminium in Brazil since 1974. The deal allows Vale will divest itself of the operational side of the business while
retaining an interest in its returns.
Vale said it was well positioned in the upstream aluminium chain with world-class bauxite and alumina assets. But it said its share of the aluminium industry was a
small one with little potential for growth given its lack of access to low-cost energy sources.
It added that Norsk Hydro was a major producer of primary aluminium, with access to energy at competitive costs, technological expertise and potential for growth.
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