May 26 2004
Hydro has decided to exercise its right to acquire a 65 per cent interest in the Jamaican alumina refinery Alpart and sell this interest on to Switzerland based Glencore AG.
The deal will enhance value creation through improved operations and cost synergies, says Hydro in a press release on Tuesday.
As a part of its Chapter 11 reorganisation, Kaiser has entered into an agreement to sell its 65 per cent interest in Alpart to the Russian company RUSAL. According to the Alpart Partnership agreement, Hydro has the right of first refusal on this transaction. Hydro has decided to exercise this right. Simultaneously Hydro has agreed to sell this interest on to Glencore on identical terms and conditions. This transaction will not generate any accounting gain or loss for Hydro.
Hydro has held 35 per cent of Alpart since the late 1980's, and Hydro's annual off-take is approximately 550,000 tonnes of alumina.
In terms of the agreement with Glencore, Alpart will change from being operated by a managing partner, to having an independent management. This will enhance management focus and contribute to strengthen the recent positive trends in Alpart. Both owners will be active participants in the Board of Directors.
Furthermore the agreement contemplates an optimisation of bauxite reserves between Alpart and Windalco, an alumina refining company in Jamaica, 93 per cent owned by Glencore. The balance, seven per cent, is held by the Government of Jamaica.
Synergies
Hydro and Glencore have also entered into a Memorandum of Understanding, committing the parties to explore the possibility of a closer cooperation and utilisation of synergies between Alpart and Windalco. Windalco has an annual production of approximately 1.25 million tonnes of alumina.
Any optimisation of bauxite mining activities, as well as the changes in ownership in Alpart, will be subject to approval by the Jamaican government.
"Hydro believes the agreement with Glencore holds a strong industrial logic that will create value for the companies involved and enhance the position of the Jamaican bauxite and alumina industry," says Jon-Harald Nilsen, Executive Vice President of Hydro and head of the company's aluminium operations.
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