Alcoa Corp. has amended its joint venture with the Saudi Arabian Mining Company (Ma’aden) in which Alcoa holds a minority, 25.1% stake.
The joint venture was created in 2009 as a fully integrated aluminium complex in the Kingdom of Saudi Arabia, comprised of three entities: the Ma’aden Bauxite and Alumina Company (MBAC), the Ma’aden Aluminium Company (MAC; the aluminium smelter and casthouse), and the Ma’aden Rolling Company (MRC; the can and auto sheet mill).
The amended JV agreements, signed 26 June, include: Alcoa will transfer its 25.1% interest in MRC to Ma’aden and make a contribution to MRC in the amount of USD100 million. Alcoa is released from all future MRC obligations, including Alcoa’s sponsor support of around USD295 million of MRC debt and its share of any future MRC cash requirements. Alcoa will avoid future capital contributions in any MRC debt restructuring and recapitalization. Alcoa and Ma’aden further defined MBAC and MAC shareholder rights, including the dividend policy.
The parties will maintain their commercial relationship, which includes Alcoa providing sales, logistics and customer technical services support for MRC products for the North American can sheet market. The company will retain its 25.1% minority interest in MBAC and MAC, and Ma’aden will continue to own a 74.9% interest.
“The Ma’aden joint venture aluminium complex has been an integral part of our portfolio, and we greatly value our relationship with our Saudi partners,” said Alcoa president and CEO, Roy Harvey. “As we look ahead, divesting Alcoa’s investment in MRC enables us to pursue future returns in our bauxite mining, alumina refining, and aluminium smelting businesses and gives Ma’aden more strategic flexibility to further develop the rolling business.”
Alcoa will record an estimated charge associated with the disposition of its interest of around USD320 million (pre- and after-tax), or $1.72 per share, in the second quarter of 2019. The charge includes the write-off of Alcoa’s investment in MRC, the cash contributions noted above, and the write-off of Alcoa’s share of MRC’s delinquent payables due to MAC of USD59 million that were forgiven as part of this transaction. Investment losses attributable to MRC included in net income totalled USD34 million (pre- and post-tax) in 2018.