Alcoa takeover puts South32's Worsley workforce on a collision course over pay

Workers at South32's Worsley Alumina refinery in Western Australia have begun a 48-hour stoppage, seeking greater security over their remuneration and working conditions ahead of Alcoa's planned acquisition of the company's aluminium assets for up to USD 5.6 billion. The industrial action involves members of the Electrical Trades Union (ETU) and the Australian Manufacturing Workers' Union (AMWU), with the ownership transition raising concerns over existing employment agreements and incentive payments.

The stoppage began on November 10 and coincides with a scheduled shutdown at the refinery's main processing plant. Around 200 union members are employed at the Worsley operation, according to AMWU state secretary Steve McCartney, who said workers wanted their existing earnings protected before the proposed change in ownership. 

Bonus guarantees remain a key sticking point

A major concern for the workforce is the future of short-term incentive payments, which have formed a significant part of employees' remuneration. McCartney said Worsley workers had received an average bonus of 10 per cent over the past five years and wanted the payments secured through their enterprise agreement.

The union has argued that South32 has referred to incentive payments when discussing employees' overall remuneration but has not provided a binding guarantee to protect those earnings. McCartney clarified that the request was not for higher payments but for the continuation of benefits workers had consistently received.

Differences in working hours and employment conditions between South32 and Alcoa employees performing comparable roles have also become a point of contention.

ETU WA secretary Adam Woodage said Alcoa's shift and day workers have a 36-hour working week, compared with 42 hours for shift workers at Worsley. South32's day workers complete 40 hours across four 10-hour days.

Woodage argued that these differences would come under greater scrutiny as the companies move towards combining their aluminium operations. He said employees wanted an agreement that recognised their skills, contributions and role in the business.

South32 said it was engaging constructively with employees and their representatives during enterprise agreement negotiations. The company maintained that Worsley employees receive benefits beyond their base wages and that its existing short-term incentive policy would continue after the transaction is completed.

The company also said it had plans in place to maintain operations at Worsley Alumina during the industrial action and did not expect the stoppage to affect production. 

To know the futuristic market and value proposition of red mud, explore the report "A Comprehensive Analysis of Bauxite Residue (Red Mud): Sustainability, Resource Recovery and Strategic Recommendations"

Alcoa's USD 5.6 billion acquisition of South32 assets

The employment dispute comes as Alcoa prepares to take over a substantial part of South32's aluminium value chain through a transaction with an implied enterprise value of up to USD 5.6 billion.

Announced in July 2026, the deal covers South32's 86 per cent interest in Worsley Alumina in Western Australia, full ownership of the Hillside Aluminium smelter in South Africa, a 33 per cent interest in Brazil's Mineração Rio do Norte bauxite mine, a 36 per cent interest in the Brazil Alumina refinery and a 40 per cent interest in the Brazil Aluminium smelter.

The transaction's implied enterprise value comprises USD 3.1 billion in cash, approximately USD 1 billion in newly issued Alcoa shares, around USD 750 million in net debt and lease liabilities to be assumed by Alcoa, and up to USD 750 million in contingent cash payments linked to agreed alumina and aluminium price targets through 2030.

Alcoa will also assume rehabilitation provisions associated with the acquired assets, estimated at approximately USD 1.2 billion. These provisions are separate from the USD 5.6 billion implied enterprise value.

South32 intends to distribute approximately half of the Alcoa shares it receives, worth around USD 500 million at the time of the announcement, to eligible shareholders through a fully franked special dividend following completion.

The transaction excludes Mozal Aluminium in Mozambique, which remains under South32's ownership and on care and maintenance.

The acquisition is targeted for completion by June 29, 2027, subject to the required regulatory and other closing conditions. South32 shareholders approved the transaction on October 15, 2026.

Unlock key insights from leading companies and experts across the aluminium ecosystem with our e-Magazine - Mine to Market: Aluminium Producers & Manufacturers 2026

Worsley plays a strategic role in Alcoa's expanded portfolio

The Worsley refinery is a significant part of Alcoa's planned expansion across the bauxite, alumina and aluminium value chain. The facility has an annual alumina production capacity of approximately 4.4 million tonnes, making it an important asset in Western Australia's alumina industry.

According to Wood Mackenzie, the acquisition will increase Alcoa's attributable bauxite production by 53.6 per cent to nearly 53 million tonnes annually, while attributable alumina production is expected to rise by 51.6 per cent. The consultancy also estimates that the transaction will increase Alcoa's aluminium smelting capacity by around 26 per cent.

Alcoa expects the acquisition to generate approximately USD 900 million in net present value through operational synergies, including improved integration between Worsley and its existing Western Australian operations.

The expanded portfolio is expected to produce approximately 14.8 million tonnes of alumina and 3.2 million tonnes of aluminium annually once the transaction is completed.

Against this backdrop, securing experienced employees and maintaining stable operations at Worsley will remain important as Alcoa prepares to integrate the acquired assets. The outcome of the enterprise agreement negotiations could therefore shape employment conditions at one of the key facilities included in the proposed acquisition.

Explore alumina and other essential inputs in the right grades from global suppliers on AL Biz.