US aluminium giant Alcoa has announced the sale of a 25.1% stake in its joint venture with Ma’aden, marking a significant move in its portfolio simplification strategy.
Alcoa to Divest Stake in Saudi Joint Venture
Alcoa, a leading aluminium producer, has agreed to sell its 25.1% stake in the joint venture with Saudi Arabian mining company Ma’aden for $1.1 billion. The sale includes approximately 86 million Ma’aden shares, along with $150 million in cash. This transaction is part of Alcoa’s ongoing efforts to streamline its portfolio and improve financial flexibility.
The joint venture was established in 2009 as a fully integrated mining complex in Ras Al-Khair Industrial City, Saudi Arabia. Ma’aden already holds a 74.9% stake in the joint venture, which Alcoa now plans to partially exit.
Deal Set to Close in 2025
The company expects to finalise the transaction in the first half of 2025, subject to regulatory approvals. Following the sale, the company will still retain around 2% of Ma’aden’s current shares outstanding, which it will hold for a minimum of three years.
This move aligns with the company’s broader strategy of simplifying its business operations. The company’s CEO William Oplinger emphasised that the transaction enhances the visibility of their investment in Saudi Arabia, while providing the company with greater financial flexibility.
“This transaction simplifies our portfolio, enhances visibility in the value of our investment in Saudi Arabia, and provides greater financial flexibility for Alcoa,” Oplinger said.
Ma’aden’s Growing Role in Saudi Economy
The sale comes as Ma’aden continues to expand its role in Saudi Arabia’s economic landscape. The mining sector has been positioned as a central pillar of Saudi Arabia’s economic diversification efforts under the Vision 2030 plan. Bob Wilt, Ma’aden’s CEO, expressed optimism about the future, saying, “We look forward to future opportunities to collaborate as we continue to build the mining sector into the third pillar of the Saudi economy.”
This deal represents a continuation of Ma’aden’s ambitious growth plans as it seeks to further cement its position as a global mining powerhouse.
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Alcoa’s Strong Financial Position
This transaction follows Alcoa’s strong financial performance in the second quarter of 2024. The company posted revenue of $2.9 billion, surpassing analyst expectations of $2.8 billion. The deal is expected to provide additional financial flexibility to Alcoa, allowing it to explore new opportunities while reinforcing its existing investments.
Alcoa’s sale of its stake in the Ma’aden joint venture is also in line with its long-term strategy of divesting non-core assets, allowing it to focus on its core aluminium operations. The company’s remaining 2% stake in Ma’aden will still give it exposure to the growing Saudi mining industry.
Ma’aden’s Integrated Aluminium Complex
The Ma’aden joint venture was created in 2009 as a fully integrated mining complex. It operates from bauxite mining to alumina refining, primary aluminium smelting, and rolling operations. The refinery, located in Ras Al-Khair Industrial City, plays a significant role in Saudi Arabia’s mining sector.
Alcoa’s decision to sell part of its stake reflects its strategic move to streamline operations, while Ma’aden, already the majority owner, will gain further control over the aluminium complex. This positions Ma’aden to strengthen its influence in the region’s aluminium market.
A New Era for Alcoa and Ma’aden
This transaction signals a new chapter in Alcoa’s presence in the Middle East. The company, which has played a pivotal role in developing the aluminium industry in Saudi Arabia, will now take a more hands-off approach. Nevertheless, the retained 2% stake shows Alcoa’s continued belief in the potential of Saudi Arabia’s mining sector.
Alcoa and Ma’aden have collaborated for over a decade, and both parties remain open to future partnerships. The simplified ownership structure may open doors for new opportunities as Saudi Arabia continues its drive towards economic diversification.
Conclusion
Alcoa’s sale of its 25.1% stake in the Ma’aden joint venture for $1.1 billion is a significant step in the company’s portfolio optimisation strategy. It highlights Alcoa’s commitment to maintaining a streamlined and flexible business while still retaining a foothold in Saudi Arabia’s growing mining sector. For Ma’aden, the acquisition of Alcoa’s shares consolidates its control over the aluminium complex and furthers its role as a key player in Saudi Arabia’s mining future.
The transaction, expected to close in 2025, will mark a pivotal moment in the evolution of both companies.
