THE acquisition of additional shares in Mozal Aluminium by South32 from Japanese multinational Mitsubishi would not be completed until the middle of this year, said the Perth-headquartered company.
This is after reporting today a delay in completing the deal which was originally set for a March quarter deadline. South32 did not detail the reason for the delay.
South32 said, however, that profits from Mozal Aluminium from July 2021 until deal completion had already been accounted for in the $250m acquisition price, implying no opportunity cost for South32.
“The transaction consideration includes joint profit sharing on our increased shareholding with Mitsubishi for the period 1 July 2021 until completion of the transaction,” it said.
Shares in South32 fell about 3.5% on the Australian Stock Exchange today, but on a year to date basis the stock is about 22% stronger.
The price of aluminium is about $3,416/t, a 22% gain year-to-date and 54% on a 12-month basis. The metal was already on a price charge last year owing to a growing supply deficit, but the deficit has widened amid disruptions to supply from Rusal Aluminium following the invasion of Ukraine by Russia.
Australia sanctions on the supply of alumina to Rusal and the suspension of mining at Rusal’s Nikolaev refinery in Ukraine – which has a capacity of 1.75 million tons annually (Mt/y) – has limited Rusal’s access to the aluminium ingredient.
Rusal has a 20% share in the Queensland Alumina refinery that has capacity of 3.95Mt/y and therefore provides Rusal 790,000 t/y, according to a report by Reuters.
Combined, this means a shortfall of 3.3Mt of alumina (about 9% of global alumina trade), said Renaissance Capital in a recent report.
South32 announced in September that it would increase its stake in the Mozal aluminium in Mozambique to 72.1% after exercising its pre-emptive rights over Mitsubishi’s 25% stake at a cost of $250m. The deal would be funded from cash.
The transaction would increase South32’s aluminium production by 15% or 145,000 tons to a total of 1.14Mt/y and comes as the group reopened its Alumar alumina facilities in Brazil.
China recently exported a trial 30,000 tons batch of alumina to Russia to test future supplies to Russia. However, the replacement of lost alumina volumes was unlikely to be made up by Chinese imports, said Renaissance Capital.
China does not have spare alumina capacity as its self sufficiency had fallen below 100% in January and February, the bank said.
In addition, China does not have enough bauxites – in which self sufficiency is only 40% of requirements – in order to ramp up alumina production quickly, it added.