Nonferrous

Nickel Defies Gravity

Xstrata Sells Off Aluminum Assets

Xstrata plc, which is based in Switzerland, has announced the sale of Xstrata Aluminum, comprising all of Xstrata’s aluminum interests, to Apollo Management LP, based in New York City, for $1.15 billion.

Xstrata Aluminum was created from the former Falconbridge Group’s aluminum assets, known as Noranda Aluminum, following Xstrata’s acquisition of Falconbridge Ltd. last year. The sell-off follows a review in which the company determined the best course of action for the aluminum division.

The former Noranda Aluminum includes a 100 percent owned primary smelter in New Madrid, Tenn., and three rolling mills in Tennessee, North Carolina and Arkansas, together with a 50 percent interest in the Gramercy aluminum refinery in Louisiana and St. Ann bauxite mine in Jamaica, both of which are owned through a joint venture with Century Aluminum Inc.

Mick Davis, Xstrata chief executive, says: "The sale of Xstrata’s aluminum assets represents the successful conclusion of the in-depth review of the business we commenced shortly after Xstrata took control of Falconbridge in August 2006."

In deciding to sell off the division, Xstrata said it determined that while the Noranda Aluminum division was profitable, it wasn’t profitable enough to allow the company to grow the operations and did not have enough size or upstream exposure to make any expansion worthwhile.

Alcoa, North America’s largest aluminum company, is preparing a bid to acquire Alcan Inc. in a deal that would consolidate North America’s two largest aluminum producers.

According to a Reuters report, Pittsburgh-based Alcoa is preparing an estimated $27 billion offer for Montreal-based Alcan. The bid, considered hostile from the point of view of Alcan’s management, is being prepared after lengthy talks between the two did not produce an agreement.

"We are very disappointed that those efforts did not result in a negotiated transaction—a conclusion we would have strongly preferred," Alcoa chairman and CEO Alain J.P. Belda said.

If the two companies were to combine, it would create the world’s largest producer of aluminum, according to Reuters, surpassing Russian company Rusal.

"We believe firmly in the compelling strategic rationale behind the combination of Alcoa and Alcan and are convinced that this transaction creates substantial value for both sets of shareholders and for our customers around the world," added Belda in his statement. "We are therefore taking our offer directly to Alcan shareholders."

Some observers have questioned whether the two North American companies can clear anti-trust hurdles, which is why Australia’s BHP Billiton was at one time considered a more likely buyer of Alcan.

According to Reuters, Norddeutsche Affinerie (NA), the largest copper producer in Europe, is considering building a copper recycling plant in Louisiana.

Norddeutsche is in talks with the state government about building a plant between Baton Rouge and New Orleans, according to CEO Werner Marnette.

The project would be similar to Norddeutsche’s copper recycling facility in Luenen, Germany, which produces about 180,000 metric tons of copper cathodes annually.

"The Americans have closed all their copper recycling, and the U.S. exports enormous volumes of computer and electro scrap to China every year," Marnette says. "This project would be a step to assisting the U.S. to secure its raw materials supplies."