Aluminum giant, Alcoa Inc. (AA) said that it has concluded two sales, within its Global Primary Products portfolio, one in the U.S. and another in Jamaica.
On Oct 15, 2014, Alcoa announced that Alcoa World Alumina and Chemicals (“AWAC”) will sell its full ownership stake in the Jamalco bauxite mining and alumina refining joint venture to Noble Group Ltd. for $140 million. The Jamalco bauxite mining and alumina refining joint venture was owned 55% by Alcoa Minerals of Jamaica (AMJ) and 45% by Clarendon Alumina Production Ltd (CAP).
AMJ is part of the AWAC joint venture, owned 60% by Alcoa and 40% by Alumina Ltd. CAP is fully-owned by the Government of Jamaica. AWAC completed the sale of its 55% interest after receiving all regulatory approvals. Per the deal, AWAC will continue as the managing operator for three years and the employees will remain employed by Jamalco.
Alcoa also completed the sale of its 50.3% ownership stake in the Mt. Holly aluminum smelter in Goose Creek, SC, to Century Aluminum Company. The company reached an agreement to sell the same for $67.5 million in cash, plus an additional potential earn-out on Oct 23, 2014.
The smelter has a capacity to produce 229,000 metric tons of aluminum annually and employs 500 people, who will transition to Century as part of the sale. The divestiture will reduce Alcoa’s global smelting capacity to 3.5 million metric tons per year.
Both of these deals are in line with Alcoa’s strategy of moving down the cost curve and maintaining a lower cost base for the commodities business while reshaping its upstream business. Alcoa continues to reshape its upstream portfolio in order to create globally competitive commodity business, improve productivity and lower cost base.
Alcoa’s shares rose around 1.3% in the trading session Tuesday. The stock closed the day at $17.30, gaining around 0.9%.
At its Investor day, Alcoa reaffirmed its goal to improve its alumina cost position to 21st percentile by 2016. Alcoa also aims to trim its position on the global aluminum cost curve by 5 percentage points to 38th percentile by 2016. In its Primary Metals business, the company curtailed, closed or sold 1.3 million metric tons, or 31% of its highest cost global smelting capacity since 2007.
Alcoa currently carries a Zacks Rank #2 (Buy).
Other mining companies worth a look include Orbite Aluminae Inc (EORBF), MAG Silver Corp. (MVG) and Lake Shore Gold Corp. (LSG). All of these hold a Zacks Rank #2 (Buy).
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