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SINGAPORE-LISTED Noble Group on Thursday said it has signed a definitive agreement with New York-listed Alcoa to buy Alcoa World Alumina and Chemicals' (AWAC) 100 per cent stake in a Jamalco bauxite mining and alumina (aluminum oxide) refining joint venture for US$140 million.
"This transaction will provide Noble with an additional 778,800 metric tonnes of annual alumina off-take while the Jamaican government retains its 45 per cent ownership of the joint venture," said Mark Hansen, head of Noble's metals division.
AWAC will continue as the managing operator for three years under a compensated service agreement and employees will remain employed by Jamalco.
The Jamalco joint venture is 55 per cent owned by Alcoa Minerals of Jamaica (AMJ) and 45 per cent owned by Clarendon Alumina Production (CAP). CAP, in turn, is wholly owned by the government of Jamaica.
The AWAC joint venture is 60 per cent owned by Alcoa and 40 per cent by Alumina Ltd.
"The decision to sell AWAC's stake in Jamalco is in line with Alcoa's global strategy to reshape its upstream portfolio and lower the cost base of our commodity business," said Bob Wilt, president of Alcoa Global Primary Products. "The sale will help achieve those goals, while maintaining jobs and protecting the economic contributions of Jamalco to Jamaica."
Noble will pay the consideration using cash and internal resources.
The sale is subject to customary regulatory approvals, and is expected to close by Q4 2014. As a result of the transaction, Alcoa will record a non-cash loss of about US$80 million to US$100 million, or US$0.07 to US$0.09 per share, after-tax and non-controlling interest in the fourth quarter.
Goldman Sachs acted as an advisor to Noble Group on this transaction.