By Luciana Magalhaes
SAO PAULO, Jan 29 (Reuters) – Aluminium Corporation of China (Chinalco) and Rio Tinto agreed to acquire a controlling stake in Companhia Brasileira de Aluminio for 4.69 billion reais ($903.61 million), the firms said on Thursday.
Together, the companies will acquire a 68.6% stake or 446.6 million shares of the Brazilian aluminium producer known as CBA for 10.50 reais each, they said. The controlling stake will be purchased from Brazilian conglomerate Grupo Votorantim, they added.
The two will also launch a tender offer for the remaining CBA shares in a mandatory move under Brazilian regulations that can lead to the delisting of the firm from the Sao Paulo exchange B3.
Reuters reported earlier that Chinalco and Rio Tinto were close to announcing the deal for a controlling stake in CBA. Chinalco is the biggest shareholder in Rio Tinto’s UK listing and the two are partners in a huge iron ore mine in Guinea.
The acquisition price represented a 1.4% premium on CBA’s closing price on Thursday.
“I like it, it’s a very bullish signal,” said CLSA analyst Baden Moore in Sydney. Chinese aluminium producers investing in production overseas underlined their limited opportunities at home, which suggested limited supply growth for the light metal, he said.
For Rio Tinto, which is due to make an announcement about a possible tie-up with Glencore by February 5, the investment doesn’t move the dial, but it is in line with its strategy favouring low-carbon aluminium, he said. Low-carbon aluminium is expected to benefit from government policies related to the energy transition.
Chinalco and Rio Tinto said the stake in CBA will be managed through a joint venture, owned 67% by a subsidiary of the Chinese firm and 33% by the Anglo-Australian miner. Rio Tinto shares fell 1.2% in a market that was down overall.
CBA operates a low carbon integrated aluminium production chain that spans bauxite mining, refining and smelting. It also manufactures diverse primary aluminium products.
The Brazilian company’s shares have more than doubled in the last 12 months, pushing its market capitalization to $1.27 billion as of Thursday, according to LSEG data.
The sale process also attracted interest from Emirates Global Aluminium (EGA), a UAE-based company jointly owned by Abu Dhabi’s Mubadala sovereign wealth fund and Dubai’s Investment Corporation of Dubai, Reuters has reported. However, negotiations with EGA did not advance.
(Reporting by Luciana Magalhaes and Andre Romani in Sao Paulo and Sherin Sunny in Bengaluru. Additional reporting by Melanie Burton in Melbourne; Editing by Kylie Madry)
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