Sale consistent with Company strategy to lower the cost profile of its upstream portfolio
NEW YORK--(BUSINESS WIRE)--Alcoa (NYSE: AA) today announced that it has reached an agreement to sell its ownership stake in the Mt. Holly aluminum smelter in Goose Creek, South Carolina, to Century Aluminum Company for $67.5 million in cash, plus an additional potential earn-out. Mt. Holly is owned 50.3 percent by Alcoa and 49.7 percent by Century.
“While Mt. Holly is a strong facility, its cost structure doesn’t match Alcoa’s criteria for a low cost portfolio of upstream assets,” said Bob Wilt, President, Alcoa Global Primary Products. “The sale will help achieve Alcoa’s strategy to optimize its commodity portfolio, and protect the facility’s jobs and economic contribution to the local community. We would like to thank our community stakeholders and the employees of Mt. Holly for their years of support.”
The smelter has the 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 current power contract for the site expires in December 2015. The divestiture will reduce Alcoa’s global smelting capacity to 3.5 million metric tons per year.
The sale is subject to customary regulatory approvals, and is expected to close by the end of the fourth quarter 2014. Based on current estimates, the transaction will not result in a significant gain or loss to Alcoa.
The sale is aligned with Alcoa’s strategy to create a globally competitive commodity business and lower its position on the world aluminum production cost curve to the 38th percentile by 2016. Including this announcement, Alcoa has curtailed, closed or sold 1.3 million metric tons, or 31 percent, of its highest cost global smelting capacity since 2007.
A global leader in lightweight metals technology, engineering and manufacturing, Alcoa innovates multi-material solutions that advance our world. Our technologies enhance transportation, from automotive and commercial transport to air and space travel, and improve industrial and consumer electronics products. We enable smart buildings, sustainable food and beverage packaging, high-performance defense vehicles across air, land and sea, deeper oil and gas drilling and more efficient power generation. We pioneered the aluminum industry over 125 years ago, and today, our 60,000 people in 30 countries deliver value-add products made of titanium, nickel and aluminum, and produce best-in-class bauxite, alumina and primary aluminum products. For more information, visit www.alcoa.com, follow @Alcoa on Twitter at www.twitter.com/Alcoa and follow us on Facebook at www.facebook.com/Alcoa.
This release contains statements that relate to future events and expectations and, as such, constitute forward-looking statements. Forward-looking statements include those containing such words as “anticipates,” “expects,” “should,”“will,” or other words of similar meaning. All statements that reflect Alcoa’s expectations, assumptions or projections about the future other than statements of historical fact are forward-looking statements, including, without limitation, the anticipated timing of the closing of the sale of the Mt. Holly smelter, and statements regarding Alcoa’s goals and strategies. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements. Risks and uncertainties include, among other things, risks relating to the satisfaction of the conditions to closing the transaction in the anticipated timeframe or at all; the ability to realize anticipated benefits of the transaction; competitive developments; Alcoa’s inability to successfully realize goals established for its upstream commodity business, at the levels or by the dates targeted for such goals (including lowering its position on the world aluminum production cost curve); changes in preliminary accounting estimates due to the significant judgments and assumptions required; and the other risk factors discussed in Alcoa’s Form 10-K for the year ended December 31, 2013, and other reports filed with the Securities and Exchange Commission. Alcoa disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.