REG - South32 Limited - South32 to Acquire additional Mozal Aluminium

South32Announcement

30/09/2021 07:00

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RNS Number : 5150N  South32 Limited  30 September 2021

 South32 Limited

 (Incorporated in Australia under the Corporations Act 2001 (Cth))

 (ACN 093 732 597)

 ASX / LSE / JSE Share Code:  S32 ADR: SOUHY

 ISIN:  AU000000S320

 south32.net

30 September 2021

 

 

 

SOUTH32 TO ACQUIRE UP TO AN ADDITIONAL 25% OF MOZAL ALUMINIUM

South32 Limited (ASX, LSE, JSE: S32; ADR: SOUHY) (South32) is pleased to
announce that we have exercised our pre-emptive rights to acquire up to an
additional 25% shareholding and related rights in Mozal Aluminium, from MCA
Metals Holding GmbH (Mitsubishi). In doing so we will match a headline
purchase price of US$250M to acquire the interest, taking our ownership of the
smelter up to 72.1% 1 . Increasing our shareholding lifts our Group wide
annualised equity share of aluminium production by 15% (or 145kt) to
1,138kt 2 .

The accretive transaction, with an acquisition multiple of 3.6x FY21 EBITDA,
will be funded from cash on hand. The Group's net cash balance at the end of
August 2021 was US$553M 3 .

South32 Chief Executive Officer, Graham Kerr said "We have established a long
operating track record at the Mozal Aluminium smelter in Mozambique over the
past 20 years. 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. Our investment in the AP3XLE energy efficiency technology
is expected to further improve the competitiveness of the smelter, which
continues to operate at its technical capacity. 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.

"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. We are also working with our partner at Alumar in Brazil to
investigate a restart of the smelter using renewable energy. Both investments
are consistent with our strategy to increase our exposure to the base metals
required for the critical transition to a low carbon future."

Transaction details

Completion is expected following the satisfaction of customary conditions,
with the transaction consideration comprising:

·    a purchase price of US$250M based on our acquisition of Mitsubishi's
25% shareholding and related rights, which would be adjusted downwards on a
pro-rata basis should the Industrial Development Corporation of South Africa
(IDC) trigger their pre-emptive rights(1);

·      joint profit sharing on our increased shareholding with
Mitsubishi for the period 1 July 2021 until completion of the transaction; and

·      customary adjustments for working capital and net debt.

 

About Mozal Aluminium

Mozal Aluminium is an aluminium smelter located near Maputo, Mozambique. The
operation is currently jointly owned by South32 (47.1%), Mitsubishi (25%), the
IDC (24%) and the Government of the Republic of Mozambique (3.9% through
preference shares). Production guidance for the smelter is 273kt (47.1% basis)
in FY22 and FY23. AP3XLE energy efficiency technology is currently being
rolled out in the smelter's pot relining program, which is expected to deliver
a circa 5% (or 10ktpa to 277ktpa) increase in annual production by FY24.

About us

South32 is a globally diversified mining and metals company. Our purpose is to
make a difference by developing natural resources, improving people's lives
now and for generations to come. We are trusted by our owners and partners to
realise the potential of their resources. We produce bauxite, alumina,
aluminium, metallurgical coal, manganese, nickel, silver, lead and zinc at our
operations in Australia, Southern Africa and South America. With a focus on
growing our base metals exposure, we also have two development options in
North America and several partnerships with junior explorers around the world.

 

 Investor Relations
 Alex Volante                                    Tom Gallop

T          +61 8 9324 9029
T          +61 8 9324 9030

M        +61 403 328 408
M        +61 439 353 948

E          Alex.Volante@south32.net
E          Tom.Gallop@south32.net
 Media Relations
 Miles Godfrey                                   Jenny White

M        +61 415 325 906
T          +44 20 7798 1773

E          Miles.Godfrey@south32.net
M        +44 7900 046 758

E          Jenny.White@south32.net

 

Further information on South32 can be found at www.south32.net
(http://www.south32.net) .

Approved for release by Graham Kerr, Chief Executive Officer

JSE Sponsor:  UBS South Africa (Pty) Ltd

30 September 2021

 

 1  South32's current shareholding of Mozal Aluminium is 47.1%, while the
Industrial Development Corporation of South Africa (IDC) also holds

pro-rata pre-emptive rights based on their 24% shareholding which they have
yet to exercise. If the IDC exercises its entire pre-emptive rights South32
would increase our shareholding in Mozal Aluminium to 63.7%, while IDC would
increase their shareholding to 32.5%. If the IDC do not exercise its
pre-emptive rights, then South32's shareholding in Mozal Aluminium would
increase to 72.1%.

(( 2 )) Based on 72.1% ownership of Mozal Aluminium, and FY22e production
guidance for Mozal Aluminium and Hillside Aluminium.

(( 3 ))(  )Net cash number is unaudited and should not be considered as an
indication of or alternative to an IFRS measure of profitability, financial
performance or liquidity.

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