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VANCOUVER (miningweekly.com) – US aluminium and specialist alloys manufacturer Alcoa has settled a dispute with joint venture (JV) partner in Alcoa Worldwide Alumina and Chemicals (AWAC), Australian company Alumina Inc, over a plan to separate its upstream and downstream business segments.
New York-based Alcoa and Melbourne-based Alumina have agreed to make certain changes to the AWAC agreement that will clear the way for Alcoa’s separation, while also terminating litigation related to Alcoa’s separation.
Alcoa had in May turned to a Delaware court to prevent Alumina from blocking the demerger plan. Alumina filed a counterclaim seeking court declarations to prevent Alcoa from taking further steps in its separation plan announced in September last year, including the 60% stake in AWAC, without complying with certain obligations under the AWAC agreements.
The counterclaim also sought to stop the US group from receiving offers to acquire its interest in the various AWAC companies, citing Alumina’s "first option rights".
Spearheaded by CEO Klaus Kleinfeld, the separation will see the company's upstream aviation and specialist aluminium parts business operate under the name Arconic, while the traditional upstream aluminium-smelting operations will retain the Alcoa name. The demerger is scheduled to be completed before year-end.
Effective upon the completion of Alcoa’s separation, the governance and financial policies of the JV will be modified to enhance the cooperation between the shareholders, said the companies in a joint statement.
These changes will promote greater strategic flexibility and autonomy for both partners, faster decision-making, joint input on significant decisions, improved information-sharing and a more streamlined process for resolving disputes. The changes, which will simplify AWAC’s dividend and cash management policies, require that AWAC raise a limited amount of debt to fund future mutually agreed growth projects.
“We are strengthening our partnership agreement and more closely aligning the partners’ interests. This opens the door for an industrial partner to enter the JV and, like Alcoa, become a long-term customer for bauxite and alumina,” stated Alcoa president of global primary products and future CEO of Alcoa Corporation Roy Harvey.