Australia's Alumina promises fight against Alcoa split

Australia's Alumina is preparing for a court battle with Alcoa (AA) after the U.S. group filed papers alleging its joint venture partner was threatening its planned split by claiming the demerger required its consent.

The conflict centers on the groups' Alcoa World Alumina and Chemicals, or AWAC, joint venture which operates bauxite mines and alumina refineries in Australia, South America and Africa. The operation is 60% owned by Alcoa and 40% by Alumina.

"Alcoa...is seeking to exit AWAC and introduce a new and financially weaker entity into the AWAC partnership," Alumina said on Monday. "Alcoa is thereby seeking to transfer and assign to that entity its rights, interests and obligations, which requires Alumina's consent."

In addition to claiming that Alcoa needs its approval to go ahead with its own broader restructuring, Alumina also said the split, if it proceeded, would trigger a right of first offer at the joint venture, enabling it to buy Alcoa's stake in AWAC.

Alcoa denies the claims and on Friday asked a Delaware court to clarify its right to carry out its plans. The New York-based group asked for a ruling to "forestall continuing threats by (Alumina)...to interfere with Alcoa's plan to separate its business into two companies unless Alcoa give in to a series of baseless and improper demands."

Alcoa in September announced plans to split its operations into two separately listed businesses during the second half of this year. Under the terms of the plan, a company retaining Alcoa's name will operate the upstream bauxite mining and aluminum production businesses, including the AWAC JV. A second, to be called Arconic, will house operations that make aerospace and automobile parts.

AWAC made a net profit of $318 million from revenue of $5.38 billion in 2015. Alcoa shares closed Friday at $9.35, down $0.16, or 1.7%, on their Thursday close. Shares were relatively flat Tuesday morning.

Alumina shares were unchanged Monday at A$1.435 ($1.03).