Alcoa to acquire South32's alumina and bauxite assets in deal worth over $4.1b

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Alcoa has announced plans to acquire South32's major alumina, bauxite and aluminium assets in a transaction with an upfront value of approximately USD 4.1 billion, significantly expanding its upstream aluminium portfolio.

Under the agreement, Alcoa will acquire South32's interests in the Boddington bauxite mine and Worsley Alumina refinery in Western Australia, the Hillside aluminium smelter and the idled Bayside smelter property in South Africa, as well as the Mineração Rio do Norte (MRN) bauxite mine and the Alumar alumina refinery and aluminium smelter in Brazil. The transaction excludes South32's Mozal aluminium smelter in Mozambique.

Alcoa will pay USD 3.1 billion in cash and issue approximately 17 million new Alcoa common shares, valued at around USD 1 billion, bringing the total upfront consideration to USD 4.1 billion. The newly issued shares will represent about 6 per cent of Alcoa's outstanding shares after issuance. South32 may also receive up to USD 750 million through a contingent value right (CVR), subject to agreed alumina and aluminium price targets over four annual periods beginning 1 July 2026.

Alcoa President and Chief Executive Officer William Oplinger described the acquisition as a strong strategic fit for the company, saying the assets complement Alcoa's strengths as a leading upstream aluminium producer. He added that the company is well positioned to improve operational performance and unlock long-term value from the portfolio.

Alcoa said the acquisition will strengthen its position as a leading pure-play upstream aluminium producer by expanding its global alumina and aluminium operations and increasing production scale. Once the transaction is completed, the company expects its combined operations to produce around 3.2 million metric tonnes of aluminium and 14.8 million metric tonnes of alumina annually, improving its ability to meet growing long-term demand.

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The company also expects the transaction to generate approximately USD 900 million in net present value through operational synergies, including optimisation of mining and refining activities in Western Australia and closer integration of its bauxite, alumina and aluminium operations. The addition of South32's Brazilian assets and entry into South Africa are also expected to strengthen Alcoa's global supply chain and create new growth opportunities.

According to Alcoa, the acquisition is expected to enhance the cost competitiveness of its operations, strengthen cash generation and immediately contribute to earnings per share and free cash flow after completion, supporting future shareholder returns and investment opportunities.

South32 Chief Executive Officer Matt Daley said the transaction would simplify the company's business by sharpening its focus on long-life, higher-margin upstream operations while reducing operational complexity.

Upon completion of the transaction, South32 intends to distribute at least half of the Alcoa shares received under the agreement directly to eligible South32 shareholders through an in-specie distribution, while the remaining shares may be sold in an orderly manner.

The proposed acquisition remains subject to approval by South32 shareholders and regulatory authorities, with completion targeted by 29 June 2027.

The announcement came as a surprise to communities surrounding the Worsley Alumina operation. Local representatives in the Shire of Boddington said they had received no prior indication of the ownership change, with Shire President Eugene Smalberger describing the development as a "massive shock" for the local community.

If completed, the acquisition will further strengthen Alcoa's position in the global aluminium supply chain by adding significant bauxite mining, alumina refining and aluminium smelting capacity across Australia, Brazil and South Africa.

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