Austrians In $200m Qld Smelter Deal
Sydney Morning Herald
Tuesday June 13, 1989
MELBOURNE: Austria Metall plans to acquire 20 per cent of the Comalco-managed 220,000 tonne-a-year Boyne Island aluminium smelter in Queensland, now held by Kaiser Aluminum of the US.
The acquisition by the Austrian Government-owned company for up to $200 million follows its March deal to acquire 10 per cent of the 327,000 tonne-a-year Portland smelter from the Victorian Government for $192 million.
Kaiser has had the Boyne Island interest on the market for some time as part of its debt reduction program. Comalco, a 30 per cent partner in Boyne Island, held talks with Kaiser on the sale but did not put up its hand for the interest.
Comalco is in a special position at Boyne Island as it can take up to 90 per cent of any plant expansion.
A study into a $700 million expansion to 455,000 tonnes-a-year is due to be completed in the fourth quarter.
Because it will be a brown fields expansion, the cost to Comalco for each additional annual tonne of output would be much less than that implied by Austria Metall's deal with Kaiser.
Both the Boyne Island and Portland interests will give Austria Metall annual aluminium metal production of 77,000 tonnes without allowing for planned expansions at both smelters.
That share will just about replace Austria Metall's own smelter at Ranshofen, due to be closed by 1992 after the 1987 decision by the Austrian Government not to update the 50-year-old plant for economical and environmental reasons.
The sale price of Kaiser's interest in Boyne Island has not been revealed -the deal is not due for completion until the middle of the year - but a guide is provided by Austria Metall's Portland deal.
Austria Metall's deal with the Victorian Government for 10 per cent of the Portland smelter ($181 million for the interest plus $11 million for planned expansions) equates to it paying about $5,500 for each annual tonne of production acquired.
Applying the same figure to its Boyne Island deal results in a $240 million valuation.
A lesser $169 million ($3,822 a tonne) for the deal is implied by the sharemarket's $125 million valuation of the listed 10 per cent Portland partner, First National Resource Trust.
The actual amount agreed to by Austria Metall for each annual tonne of output at Boyne Island is expected to have approached what it paid for Portland.
© 1989 Sydney Morning Herald