Aluminium Corporation of China (Chinalco) and Rio Tinto acquires Companhia Brasileira de Alumínio

Aluminium Corporation of China (Chinalco) and Rio Tinto have finalized a deal to acquire a controlling stake in Companhia Brasileira de Alumínio (CBA) for approximately $903 million, marking a major investment in the Brazilian aluminium sector. The acquisition grants Chinalco and Rio Tinto majority control over CBA, contributing significantly to their presence in South America's aluminium production landscape.

The agreement involves the purchase of 446.6 million shares, constituting 68.6% of CBA, with a transaction price set at 10.50 reais per share. These shares will be acquired from Grupo Votorantim, CBA's present majority owner. This purchase price represents a 1.4% premium over CBA's closing share value, indicating alignment with current market conditions. The acquisition will be structured through a joint venture, with Chinalco holding a 67% interest and Rio Tinto the remaining 33%. Furthermore, Chinalco and Rio Tinto will initiate a mandatory tender offer for the remaining CBA shares, potentially leading to CBA’s delisting from Brazil's B3 stock exchange.

CBA, a significant entity in the Brazilian aluminium market, engages in bauxite mining, alumina refining, aluminium smelting, and the production of various primary aluminium products. Over the past year, the company’s valuation has increased substantially, doubling its market capitalization to roughly $1.27 billion. This acquisition enhances Chinalco and Rio Tinto's integrated supply chain capabilities across key segments of the aluminium manufacturing process.

The acquisition process had previously garnered interest from Emirates Global Aluminium (EGA), a leading producer from the UAE. However, negotiations with EGA did not advance, enabling Chinalco and Rio Tinto to secure the deal. Reuters had earlier indicated that the transaction was approaching completion, suggesting competitive maneuvers in the sector’s strategic consolidation.

Looking forward, the joint venture between Chinalco and Rio Tinto will need to undergo regulatory scrutiny, which is customary for transactions involving cross-border deals and significant industry impact. Completion of the mandatory tender offer could result in operational shifts and strategic realignments as CBA transitions within this new ownership structure.