BHP Billiton to sell stake in Guinea alumina venture

2nd November 2012 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

PERTH (miningweekly.com) – Mining giant BHP Billiton would sell its 33.3% interest in the Guinea Alumina joint venture (JV) to it partners for $1.

Under the current project shareholders agreement, each of the JV partners – TSX-listed Global Alumina Corporation, Dubai Aluminium Company (Dubal) and MCD Industry Holding Company (Mubadala) – had the right to purchase a proportionate share of the interest to be sold.

Global Alumina said this week that, depending on whether each of the other two JV partners exercised their options, its own shareholding in the Guinea Alumina JV could increase from the current 33.3% to between 50% and 66.7%.

“BHP’s willingness to sell its one-third interest in the project to its partners represents a significant, positive milestone for Global Alumina and the project, as the remaining owners’ development interests are closely aligned,” said Global Alumina CEO Bruce Wrobel.

“Furthermore, the right to sell the additional alumina that is associated with the additional ownership interest will enhance the company’s value,” he added.

The TSX-listed firm noted that pursuant to the sales and purchase agreement, Global Alumina would pay BHP a cash payment of $1 for its share in the JV, and would reimburse the mining major for its project funding obligation from the date of the sales agreement to closing.

The $20-million subscription payment payable to Global Alumina on financial close of the project would be waived, while the Toronto-based firm would assume BHP’s project obligations.

The closing of the transaction was conditional upon a number of conditions, including Dubal and Mubadala either waiving or exercising their options, as well as a capital raising by Global Alumina.

The Guinea Alumina JV was hoping to develop a ten-million-ton-a-year bauxite operation, with a refinery capable of producing more than 3.3-million tons a year.

To date, the JV owners have spent some $800-million on the project.