Rio Tinto and Aluminum Corporation of China (Chalco) are set to buy a controlling stake in Brazil’s Companhia Brasileira de Alumínio (CBA) through a joint venture.
Chalco and Rio Tinto will buy 446.6 million ordinary shares, representing about 68.6% of CBA, from Votorantim for a cash consideration of about 6.29 billion yuan ($904 million).
The acquisition will be executed through a Brazil-based joint venture to be established by Chalco Hong Kong and Rio Tinto, with Chalco holding 67% and Rio Tinto 33%.
Upon completion, both the joint venture and CBA will become subsidiaries of Chalco, and their financial results will be consolidated into Chalco’s accounts.
Chalco will contribute about 4.21 billion yuan, while Rio Tinto will contribute about 2.07 billion yuan, the filing said.
Following completion, the joint venture will be required under Brazilian law to launch a mandatory tender offer for all remaining outstanding shares of CBA.
Rio Tinto Aluminium & Lithium Chief Executive Jérôme Pécresse said: “This acquisition, jointly with Chalco, of Votorantim’s controlling position in CBA’s fully integrated aluminium supply chain in Brazil is aligned with our strategy to deliver value for shareholders by extending our low-carbon, renewable-powered aluminium footprint in rapidly growing markets.
“It also provides the opportunity to grow our bauxite and alumina supply chain in the Atlantic region.”
CBA is an aluminium business in Brazil. It has an aluminium complex in São Paulo (the Alumínio Complex), which has an 800,000 tonnes capacity alumina refinery, a 400,000 tonnes capacity aluminium smelter, secondary recycling capacity of 300,000 tonnes, and downstream processing facilities.
It is supported by a 1.6GW portfolio of renewable power generation assets, including 21 hydropower plants and wind power complexes.
It serves the domestic market, with products and operations powered by 100% renewable electricity.
CBA also has three bauxite mines in production with current production of approximately 2 million tonnes of bauxite per year.
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