Wmc In Virgin Islands Acquisition
The Age
Wednesday July 26, 1995
Western Mining Corporation's $1 billion global alumina alliance with the Aluminum Company of America has begun to pay dividends for the Melbourne-based mining giant.
The two companies said yesterday they would replace the international commodity trader Glencore as the owners of the St Croix alumina refinery in the Virgin Islands.
The acquisition of the 600,000 tonne-a-year refinery is sweetly timed as alumina prices have rocketed past $US300 ($A406) a tonne in response to stronger aluminium prices.
How sweet is not known as the terms of the transaction have not been released. The lack of disclosure is typical of the operating and financial history of the St Croix operation.
As the WMC-Alcoa deal suggests, the refinery has been treated as a swing producer. Production has come on at a time of high prices and is switched off during periods of low prices.
St Croix has been closed since late last year.
The market was left to second-guess yesterday when the Alcoa-WMC alliance would bring it back on. ``Some time" in the next two years is all the partners would say.
The difference this time around is that St Croix will become part of the Alcoa group's worldwide alumina system now owned 40 per cent by WMC as a result of its agreement last year with Alcoa of the US.
That deal saw WMC exchange $US348.5 million and a 9 per cent stake in Alcoa of Australia for 40 per cent of Alcoa's global system.
The immediate benefit of the deal was to boost WMC's equity share of annual alumina production from the Alcoa system from three million to 3.9 million tonnes 10 per cent of world production.
That global presence has long been an aim of the WMC managing director, Mr Hugh Morgan.
The broader alumina deal with Alcoa gave WMC an entry into refineries in Point Comfort (US), Jamalco (Jamaica), Paranam (Surinam) and Sao Luis (Brazil).
In the meantime, the market eagerly awaits Alcoa's feasibility study for a $US1 billion alumina refinery in India and confirmation of a $A600 million expansion of the Western Australian refineries.
© 1995 The Age
Share This