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Alcoa's feud with Australia's Alumina Ltd intensifies as US giant confirms split
General01/Jul/2016www.smh.com.auAustralia's Alumina Ltd says its opposition to a break-up of US giant Alcoa has been validated by new details of the split.
Nine months after it first flagged plans to break itself into two companies, Alcoa officially confirmed on Thursday morning that it would go ahead with the plan to separate its upstream and downstream assets.
The New York-based company filed legal documents that outline how the split will be conducted, and those documents confirmed that the assets Alcoa shares with Alumina would be spun into a new legal entity.
The two companies jointly own a collection of bauxite mines, alumina refineries and aluminium smelters called the "AWAC joint venture", with Alcoa owning 60 per cent and Alumina owning 40 per cent.
Melbourne-based Alumina said confirmation that the joint venture assets would be put into a new legal entity validated its recent legal arguments that the split breached the terms of the 22 year-old joint venture agreement.
Alumina believes it has first right to acquire Alcoa's stake in the joint venture assets if the New York company plans to exit them, and Alumina believes Alcoa is legally exiting the assets under the design of the split.
Alumina is also concerned that Alcoa's stake in the assets will be held by a much weaker company after the split. The notion that Alumina will have a weaker partner after the split was partially conceded by Alcoa on Thursday morning.
But Alcoa also argued that the two new companies would be more targeted, flexible and efficient after the split.
The dispute between the two companies is bound for a trial in the US in September, and the debate dominated an investor call held by Alcoa chief executive Klaus Kleinfeld on Thursday morning.
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