30/09/2021 - 14:00

South32 lifts stake in Mozambique smelter

30/09/2021 - 14:00

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Perth-based South32 has bought an additional 25 per cent stake in Mozal Aluminium for $US250 million in cash.

South32 is buying Mitsubishi's stake in Mozal Aluminium. Photo: South32

Perth-based South32 has bought an additional 25 per cent stake in Mozal Aluminium for ​$US250 million ($A347 million) in cash.

Today, South32 said it had exercised its pre-emptive rights to acquire Mitsubishi's entire interest in Mozal – an aluminium smelter located near Maputo – to lift its stake in the asset to 72.1 per cent.

The move also increases South32's share in production by 15 per cent.

The Graham Kerr-led company intends to fund the acquisition using cash on hand, which stood at $US553 million at the end of August.

Mr Kerr said the move was in line with South32’s strategy to focus on base metals required for a low carbon future.

He said the business, which exited its South African coal operations earlier this year, was also evaluating the restart of an aluminium smelter in Brazil using renewable energy.

“We are pleased to be able to increase our shareholding on value accretive terms, with a transaction that we expect will deliver a strong return for our shareholders,” Mr Kerr said of today’s announcement.

“The smelter benefits from access to hydroelectric power and key export markets into Europe.

“Our investment in the AP3XLE energy efficiency technology is expected to further improve the competitiveness of the smelter, which continues to operate at its technical capacity.”

He noted Mozal was also an important customer for South32’s Worsley Alumina refinery in WA’s South West.

The Industrial Development Corporation of South Africa owns 24 per cent of Mozul Aluminium and the Mozambican government the remaining 3.9 per cent.

Its shares were up 3.1 per cent at 3:13pm AEST to trade at $3.50.

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