Select Language:
Aluminum producer Chalco announced its plan to partner with Rio Tinto Group to acquire a controlling stake in a major Brazilian aluminum company, for BRL4.7 billion (roughly USD903 million). This strategic move aims to strengthen the company’s international presence and secure assets in low-carbon aluminum.
The deal involves Chalco and Rio Tinto, headquartered in London, purchasing a 68.6 percent ownership in the Brazilian firm. Despite the announcement, Chalco’s stock price declined, dropping as much as 10 percent during trading today.
In Shanghai, Chalco’s shares closed down 10 percent at CNY14.13 (about USD2), while in Hong Kong, they ended the day down 7.9 percent at HKD13.90 (around USD1.80). Since hitting a low point in early April last year, shares have steadily climbed amid global supply-demand dynamics for aluminum, increasing nearly 180 percent on the Shanghai exchange and reaching a high of CNY15.85 yesterday—the highest level since August 2009.
Chalco stated this morning that its joint venture with Rio Tinto International Holdings has entered an agreement with the current controlling shareholder of the Brazilian company to acquire a stake at BRL10.50 (USD2) per share. Chalco owns 67 percent of the joint venture, while Rio Tinto owns 63 percent. The total transaction is valued at approximately BRL3.1 billion.
Upon completion of the acquisition, the joint venture intends to conduct a mandatory tender offer for all remaining publicly tradable shares of the Brazilian company. Although specific details weren’t provided, based on the current offer price, purchasing full ownership of the company would cost around BRL6.8 billion, with Chalco expected to cover about BRL4.6 billion.
Founded over 70 years ago, the Brazilian firm is one of the country’s oldest aluminum producers, generating over one-third of Brazil’s primary aluminum. The company is listed on Brazil’s stock exchange under the ticker CBAV3 and operates throughout the aluminum value chain. Recent unaudited financial reports showed that the company achieved operating revenues of BRL6.6 billion and a net profit of BRL393 million (USD75.7 million) in the first three quarters of last year, with net assets reaching BRL4.7 billion as of September 30.
Beyond aluminum production, the company owns stakes in 21 hydropower plants and four wind farms, providing a combined installed capacity of 1.6 gigawatts and annual renewable energy output of about 7 billion kilowatt-hours. This renewable energy focus positions the company as a leader globally in measuring carbon emissions per ton of aluminum, according to Chalco.
The acquisition is expected to expand Chalco’s aluminum capacity and facilitate the development of a new industrial hub in Brazil. It will also allow the company to capitalize on CBA’s low-carbon and low-cost green energy sources, enhancing its environmental, social, and governance standards, as well as its global supply chain and international operations.
ChatGPT
Perplexity
Gemini AI
Grok AI
