South32 acquires additional stake in Mozambique-based Mozal Aluminium smelter

The mining and metals company headquartered in Perth, Western Australia, South32 Ltd. worked out its right to acquire an additional 25% stake in Mozambique-based Mozal Aluminium, a drive that will increase its annual output by 15% from the smelter.

South32 acquired the additional stake in the aluminium smelter for $250 million from Mitsubishi subsidiary MCA Metals Holding, raising its stake in the smelter to just over 72%.

On 31st August 2021, South32 had net cash of $553 million, while it funded the purchase from cash in hand.

The Industrial Development Corporation of South Africa holds a 24% stake in Mozal Aluminium, while the Mozambique government holds 3.9% through preference shares.

Graham Kerr, Chief Executive Officer of South32 said: "The smelter benefits from access to hydroelectric power and key export markets into Europe.”

The company said: “The deal was accretive, with an acquisition multiple of 3.6x FY21 EBITDA.”

"We have established a long operating track record at the Mozal Aluminium smelter in Mozambique over the past 20 years," South32 CEO Graham Kerr said.

"During this time, we have formed strong relationships with our workforce, the community, the Mozambican government and other key stakeholders.”

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

"The smelter is an important customer for the alumina produced from our Worsley Alumina refinery and the transaction will further integrate that relationship in our supply chain," Kerr said.

"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.”