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December 22, 2008
Alcoa and ORKLA ASA Agree to Exchange Equity Stakes
Alcoa to Receive Orkla’s 50% Stake in
to Receive Alcoa’s 45% Stake in SAPA Extrusions Business.
PITTSBURGH--Alcoa (NYSE:AA) today announced it has agreed with ORKLA ASA (Orkla) to
exchange their stakes in a Norwegian smelting partnership and a Swedish
extrusion joint venture in order to focus on their respective areas of
expertise and best practices. Alcoa will receive Orkla’s 50 percent
stake in Elkem Aluminum ANS while Orkla will receive Alcoa’s 45 percent
stake in the $3.7 billion SAPA extrusion profiles business. The
transaction is expected to be completed in the first quarter of 2009.
Elkem Aluminum, which will be 100 percent owned by Alcoa following the
transaction, includes aluminum smelters in Lista and Mosjoen, Norway
with a combined output of 282,000 metric tons per year (mtpy). Included
in the transaction is Elkem’s stake in a newly opened anode plant in
Mosjoen in which Alcoa already holds an approximate 82 percent stake.
The addition of these assets increases Alcoa’s global smelting capacity
to more than 4.7 million metric tons, making Alcoa the world’s largest
primary aluminum producer.
“This action is an important step in the strategic process to strengthen
Alcoa’s smelting and anode business and to exit the soft alloy extrusion
business,” Mr. Kleinfeld said. “We will be assuming control over
businesses where we are the recognized global leader – two smelters with
long-term clean power contracts and an anode business that plays a vital
role in supporting our operations in Europe and Iceland. This move makes
good strategic and financial sense for both Alcoa and Orkla.”
The SAPA Profiles business, which will be 100 percent owned by Orkla
following the completion of the transaction, is a leading independent
manufacturer of aluminum extrusions and engages in extensive processing
operations, including surface treatment, hydro-forming, friction-stir
welding and CNC treatment. Production takes place in 15 European
countries, the US and China. The SAPA joint venture was created in July
2007 when Alcoa combined its soft alloy business with Orkla’s SAPA unit.
Aluminum extrusions are used for design solutions in virtually all
The two parties will continue to hold joint ownership in the
carbothermic process technology Alcoa is developing together with Elkem,
which is in the research and development phase. The Carbothermic process
is a new technology that holds the potential to produce aluminum at a
lower cost, driven by reduced conversion costs, lower energy
requirements, and lower emissions and at a lower capital cost than
traditional smelting. The technology also holds potential for
significant cost improvement in the production of other metals.
Alcoa expects to record an impairment charge in the fourth quarter of
2008 related to the exchange of its interests in the extrusion joint
venture and is working with its advisors to determine the details.
Alcoa is the world leader in the production and management of primary
aluminum, fabricated aluminum and alumina combined, through its active
and growing participation in all major aspects of the industry. Alcoa
serves the aerospace, automotive, packaging, building and construction,
commercial transportation and industrial markets, bringing design,
engineering, production and other capabilities of Alcoa's businesses to
customers. In addition to aluminum products and components including
flat-rolled products, hard alloy extrusions, and forgings, Alcoa also
markets Alcoa® wheels, fastening systems, precision and investment
castings, and building systems. The Company operates in 34 countries and
has been named one of the top most sustainable corporations in the world
at the World Economic Forum in Davos, Switzerland. More information can
be found at www.alcoa.com.