Latham & Watkins has advised Norsk Hydro ASA (“Hydro”) on its agreement with Glencore, who will acquire 30 percent of Brazilian alumina refinery Hydro Alunorte, the world's largest alumina refinery, and Hydro’s 5 percent ownership in the Brazilian bauxite producer Mineracão Rio do Norte (MRN). Glencore will acquire an additional 40 percent stake in MRN which is currently owned by Vale. This 40 percent interest will be acquired by Hydro from Vale and sold to Glencore on a back-to-back basis. Following the transactions, Hydro will no longer have an ownership position in MRN and Glencore will continue to supply approximately 30 percent of Alunorte’s long-term bauxite requirements from MRN.
The agreement will enable development of Hydro Alunorte by allocating capital to sustain and improve operations, continuing efforts to strengthen the refinery’s first quartile cost and carbon position as well as increasing community engagement. The transactions will have a total net enterprise value of US$1.11 billion, which will be adjusted for Hydro Alunorte’s net debt as of June 30, 2023. Net debt for 30 percent of Hydro Alunorte as of March 31, 2023, was US$335 million. The enterprise value and net debt exclude asset retirement obligations of US$40 million on a 30 percent basis. Subject to Hydro Alunorte’s performance, Hydro may make certain repayments to Glencore which are capped at US$55 million.
Latham previously advised Hydro on the acquisition of Alunorte in 2010.
The Latham team was led by London corporate partners Robbie McLaren and Nick Cline, with associates Medha Marathe, Pierre-Axel Aberg, and Michael Houlder. Advice was also provided on project finance matters by London/Dubai partner Craig Nethercott, with associates Vanessa McLellan and Daniel Chen; on tax matters by London partner Helen Lethaby and counsel James Leslie; and on Brazilian law matters by local counsel Veirano Advogados.