Xstrata Sells Off Aluminum Assets

Xstrata plc announces the disposal of Xstrata Aluminum, comprising all of Xstrata’s aluminum interests, to Apollo Management LP 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 disposal follows a review in which the company determined the best course of action for the aluminum division.

Noranda Aluminum includes a 100 percent owned primary smelter in New Madrid, Tennessee 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, commented: "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 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.

The transaction is expected to be complete by the second quarter of this year.