Business News
Alcoa and ORKLA ASA Agree to Exchange Equity Stakes
Tuesday 23. December 2008 - Alcoa to Receive Orklas 50% Stake in Elkem Aluminum; Orkla to Receive Alcoas 45% Stake in SAPA Extrusions Business.
Alcoa (NYSE:AA) today announced it has agreed with ORKLA ASA (Orkla) to exchange their stakes in a Norwegian smelting partnership and a Swedish extrusion joint venture in order to focus on their respective areas of expertise and best practices. Alcoa will receive Orklas 50 percent stake in Elkem Aluminum ANS while Orkla will receive Alcoas 45 percent stake in the $3.7 billion SAPA extrusion profiles business. The transaction is expected to be completed in the first quarter of 2009.
Elkem Aluminum, which will be 100 percent owned by Alcoa following the transaction, includes aluminum smelters in Lista and Mosjoen, Norway with a combined output of 282,000 metric tons per year (mtpy). Included in the transaction is Elkems stake in a newly opened anode plant in Mosjoen in which Alcoa already holds an approximate 82 percent stake.
The addition of these assets increases Alcoas global smelting capacity to more than 4.7 million metric tons, making Alcoa the worlds largest primary aluminum producer.
“This action is an important step in the strategic process to strengthen Alcoas smelting and anode business and to exit the soft alloy extrusion business,” Mr. Kleinfeld said. “We will be assuming control over businesses where we are the recognized global leader – two smelters with long-term clean power contracts and an anode business that plays a vital role in supporting our operations in Europe and Iceland. This move makes good strategic and financial sense for both Alcoa and Orkla.”
The SAPA Profiles business, which will be 100 percent owned by Orkla following the completion of the transaction, is a leading independent manufacturer of aluminum extrusions and engages in extensive processing operations, including surface treatment, hydro-forming, friction-stir welding and CNC treatment. Production takes place in 15 European countries, the US and China. The SAPA joint venture was created in July 2007 when Alcoa combined its soft alloy business with Orklas SAPA unit. Aluminum extrusions are used for design solutions in virtually all sectors.
The two parties will continue to hold joint ownership in the carbothermic process technology Alcoa is developing together with Elkem, which is in the research and development phase. The Carbothermic process is a new technology that holds the potential to produce aluminum at a lower cost, driven by reduced conversion costs, lower energy requirements, and lower emissions and at a lower capital cost than traditional smelting. The technology also holds potential for significant cost improvement in the production of other metals.
Alcoa expects to record an impairment charge in the fourth quarter of 2008 related to the exchange of its interests in the extrusion joint venture and is working with its advisors to determine the details.