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Glencore (GLNCY) Buys Stakes in Norsk Hydro's Assets in Brazil
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Glencore (GLNCY - Free Report) has completed the previously announced acquisition of a 30% equity stake in Alunorte S.A. and a 45% equity stake in Mineracão Rio do Norte S.A. (“MRN”) from Norsk Hydro ASA (NHYDY - Free Report) . This move provides the company exposure to lower-quartile carbon alumina and bauxite.
MRN is an open-cast, high-quality, low-cost bauxite mine located in Trombetas, Brazil. Located in the city of Barcarena, state of Para in Brazil, Alunorte is the world’s largest alumina refinery outside China. It is considered to be one of the lowest-cost refineries in the world. By bringing a change in fuel consumption and with the roll-out of electrical boilers, Alunorte is expected to move up to the first decile on the global carbon curve in 2025 and become a top provider of low-carbon alumina.
The agreement to acquire these non-controlling stakes was signed between the two parties on Apr 27, 2023.
Glencore is now part of the Alunorte joint venture with Norsk Hydro, which has a 62% interest in the venture. The remaining 8% is held by other minority shareholders. Apart from Glencore, South32, Rio Tinto and Companhia Brasileira de Aluminio own the remaining 55% stake in the MRN joint venture.
Per the deal, Glencore will not operate either of the assets. It will enjoy offtake rights for the life of mine in respect of its pro rata share of the production from both Alunorte and MRN. The major portion of the bauxite purchased by Glencore from MRN will be supplied to Alunorte.
The growing decarbonization trend globally is driving demand for primary aluminum as a strong, lightweight manufacturing metal. Glencore’s acquisition of the interest in Alunorte and MRN provides it with exposure to lower-quartile carbon alumina and bauxite and boosts its capability to supply such critical material that will support the energy transition trend.
Price Performance
Shares of Glencore have declined 17.1% in the past year against the industry's 7% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Glencore currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks from the basic materials space are Axalta Coating Systems Ltd. (AXTA - Free Report) and Universal Stainless & Alloy Products, Inc. (USAP - Free Report) . AXTA sports a Zacks Rank #1 (Strong Buy) and USAP carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Axalta Coating’s 2023 earnings is pegged at 44 cents per share. The consensus estimate for 2023 earnings has moved 23% north in the past 60 days. Its shares have gained 22% in a year.
Universal Stainless & Alloy Products has an average trailing four-quarter earnings surprise of 44.4%. The Zacks Consensus Estimate for USAP’s 2023 earnings is pegged at 27 cents per share. Earnings estimates have been unchanged in the past 60 days. USAP’s shares gained 149% in the last year.
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Glencore (GLNCY) Buys Stakes in Norsk Hydro's Assets in Brazil
Glencore (GLNCY - Free Report) has completed the previously announced acquisition of a 30% equity stake in Alunorte S.A. and a 45% equity stake in Mineracão Rio do Norte S.A. (“MRN”) from Norsk Hydro ASA (NHYDY - Free Report) . This move provides the company exposure to lower-quartile carbon alumina and bauxite.
MRN is an open-cast, high-quality, low-cost bauxite mine located in Trombetas, Brazil. Located in the city of Barcarena, state of Para in Brazil, Alunorte is the world’s largest alumina refinery outside China. It is considered to be one of the lowest-cost refineries in the world. By bringing a change in fuel consumption and with the roll-out of electrical boilers, Alunorte is expected to move up to the first decile on the global carbon curve in 2025 and become a top provider of low-carbon alumina.
The agreement to acquire these non-controlling stakes was signed between the two parties on Apr 27, 2023.
Glencore is now part of the Alunorte joint venture with Norsk Hydro, which has a 62% interest in the venture. The remaining 8% is held by other minority shareholders. Apart from Glencore, South32, Rio Tinto and Companhia Brasileira de Aluminio own the remaining 55% stake in the MRN joint venture.
Per the deal, Glencore will not operate either of the assets. It will enjoy offtake rights for the life of mine in respect of its pro rata share of the production from both Alunorte and MRN. The major portion of the bauxite purchased by Glencore from MRN will be supplied to Alunorte.
The growing decarbonization trend globally is driving demand for primary aluminum as a strong, lightweight manufacturing metal. Glencore’s acquisition of the interest in Alunorte and MRN provides it with exposure to lower-quartile carbon alumina and bauxite and boosts its capability to supply such critical material that will support the energy transition trend.
Price Performance
Shares of Glencore have declined 17.1% in the past year against the industry's 7% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Glencore currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks from the basic materials space are Axalta Coating Systems Ltd. (AXTA - Free Report) and Universal Stainless & Alloy Products, Inc. (USAP - Free Report) . AXTA sports a Zacks Rank #1 (Strong Buy) and USAP carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Axalta Coating’s 2023 earnings is pegged at 44 cents per share. The consensus estimate for 2023 earnings has moved 23% north in the past 60 days. Its shares have gained 22% in a year.
Universal Stainless & Alloy Products has an average trailing four-quarter earnings surprise of 44.4%. The Zacks Consensus Estimate for USAP’s 2023 earnings is pegged at 27 cents per share. Earnings estimates have been unchanged in the past 60 days. USAP’s shares gained 149% in the last year.