Norsk Hydro completes sale to Glencore

Hydro (NHYDY) has completed the $1.11B transaction for the sale of 30 percent interest in the Brazilian alumina refinery Hydro Alunorte and Hydro’s 5 percent interest in the bauxite producer Mineracao Rio do Norte, together with Vale‘s (VALE) 40 percent stake in MRN. Hydro and Glencore (GLNCY) will continue efforts to reduce carbon emissions from Alunorte through the fuel switch project that aims to substitute fuel oil with LNG, and the electrification of boilers. This will bring Alunorte to the first decile on the global carbon curve already in 2025, positioning Alunorte as a leading supplier of low-carbon alumina. The partners are committed to continuing the development of social projects to improve the lives and livelihoods of nearby communities.The total enterprise value for the transaction is $1.11B, which was adjusted by $244M for 30 percent of Alunorte’s net debt and deviation from normalized working capital as of June 30, 2023. The enterprise value and net debt exclude asset retirement obligations of $40M on a 30 percent basis. The parties have agreed to a post-closing price adjustment based on the financial performance of Alunorte and Hydro expects to pay the full capped amount of $55M in Q1 2024. Alunorte will continue to be consolidated in Hydro’s financial accounts. There will be no remeasurement or recognized gain related to this transaction. Following the sale, Hydro remains the largest shareholder of Alunorte with 62 percent ownership. Glencore owns 30 percent of Alunorte, while the remaining four minority shareholders collectively own 8 percent.