American aluminium giant Alcoa to exit Ma’aden joint venture, selling 25.1% stake to Saudi partner

On September 15, 2024, Alcoa Corporation announced that it had entered into a binding share purchase and subscription agreement with Saudi Arabian Mining Company (Ma’aden). Under this agreement, Alcoa will sell its entire 25.1 per cent ownership stake in their joint venture to Ma’aden for approximately $1.1 billion.

 The transaction includes roughly 86 million Ma’aden shares, valued at $950 million based on the 30-day volume-weighted average share price as of September 12, 2024, along with an additional $150 million in cash.

The joint venture, established in 2009 as a fully integrated mining complex in Saudi Arabia, now consists of two entities: the Ma’aden Bauxite and Alumina Company (MBAC), which operates the bauxite mine and alumina refinery, and the Ma’aden Aluminium Company (MAC), responsible for the aluminium smelter and casthouse. Alcoa holds a 25.1 per cent ownership stake in the venture, while Ma’aden controls 74.9 per cent. As of June 30, 2024, Alcoa’s investment was valued at $545 million.

According to Alcoa's Press Release on its website, "Pursuant to the terms of the Agreement, Alcoa will hold its Ma'aden shares for a minimum of three years, with one-third of the shares becoming transferable after each of the third, fourth and fifth anniversaries of closing of the transaction (the "holding period"). During the holding period, Alcoa would be permitted to hedge and borrow against its Ma'aden shares. Under certain circumstances, such minimum holding period would be reduced. Pro forma for the transaction, Alcoa would own approximately 2 per cent of Ma'aden's current shares outstanding."

William F. Oplinger, Alcoa’s President and CEO, said, “We deeply value our partnership with Ma’aden. We are confident that under the new arrangement, MBAC and MAC are well-positioned for success.”

“The transaction simplifies our portfolio, enhances visibility in the value of our investment in Saudi Arabia and provides greater financial flexibility for Alcoa, an important part of improving our long-term competitiveness.”

Bob Wilt, Ma’aden’s CEO, said, “Since 2009, Alcoa has been a valued partner of Ma’aden, and our aluminium business has benefited substantially from our strategic partnership.” 

“We look forward to future opportunities to collaborate as we continue to build the mining sector into the third pillar of the Saudi economy.”

The transaction is pending regulatory approvals, Ma’aden shareholder approval, and other customary closing conditions. It is anticipated to be completed in the first half of 2025.

Citi is serving as Alcoa’s exclusive financial advisor for the deal, while White & Case LLP is providing legal counsel.