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Matt Lucke Buys Missouri Aluminum Smelter from Bankrupt Noranda for $13.7M

Matt Lucke Buys Missouri Aluminum Smelter from Bankrupt Noranda for $13.7M

Glencore plc (LSE: GLEN) (SEHK: 805) (JSE: GLN) top aluminum trader, who left Glencore after its merger with Xstrata a few months earlier. The court approval follows an auction that took place on September 28 with only two bidders. MFR II LLC, a company that specializes in industrial and commercial asset disposition and liquidation, submitted a slightly lower stalking horse bid for $13 million, according to S&P Global Platts. Noranda’s alumina refinery in Gramercy, Louisiana, and bauxite mining operation in St. Ann, Jamaica, were not included in the auction. With respect to its bauxite and alumina operations, Noranda, based in Franklin, Tennessee, continues to explore strategic alternatives, including discussions with potential acquirers, it said. Noranda filed for Chapter 11 bankruptcy in February as a result of a liquidity crisis, caused by declining global aluminum prices and the current commodities markets slump. The New Madrid smelter, idled since mid-March, has a production capacity of 263,000 metric tons of primary aluminum annually, at full capacity. It is fully integrated with its own raw material unloading facility, environmental control systems and aluminum reduction plant, including carbon anode fabrication. ARG officials reportedly did not visit New Madrid or the plant before purchasing it. “They kind of bid on it site unseen,” New Madrid city administrator Richard McGill told the Southeast Missourian. The plant site also includes a fabrication facility for the production of continuous cast rod, extrusion billet and foundry ingot. Formed in 1968, the smelter is located at a strategic mid-U.S. distribution point on the west bank of the Mississippi River, five miles south of the City of New Madrid in Southeast Missouri. The New Madrid smelter has been recently plagued with rising production costs due to increasing power rates from local electricity and gas utility Ameren Missouri. Noranda Aluminum, formerly Noranda Mines, was a mining and metallurgy company originally from Rouyn-Noranda, Quebec, Canada, founded in 1922. It was listed on the TSX under the symbol NRD.LV. After eventually acquiring a large interest in rival mining company Falconbridge, they merged in 2005. The combined company continued under the name Falconbridge Ltd until it was acquired by the Swiss-based mining company Xstrata (Schweiz) AG. In 2007, global private equity firm Apollo Global Management (NYSE: APO) acquired a portion of the aluminum business from Xstrata and renamed it Noranda. After taking the company public in 2010, Apollo remained Noranda’s largest shareholder with a 33% equity stake. In May 2015, Apollo sold all of its Noranda shares in a secondary public offering. ARC will be facing massive competition from global giants, including Century Aluminum Co. (NASDAQ: CENX), a U.S.-based producer of primary aluminium formed by Lucke’s former employer Glencore in 1995, with aluminum smelters in the US and Iceland. Century is the second-largest producer of primary aluminium in the U.S. after Alcoa Inc (NYSE: AA). A month ago, Zhongwang USA LLC, led by Chinese billionaire Liu Zhongtian, founder of China Zhongwang Holdings Ltd (HKEX: 01333), the world’s second largest industrial aluminum extrusion developer and manufacturer, agreed to acquire Cleveland, Ohio-based Aleris Corp., a global aluminum rolled products producer, for $2.33 billion. Since 2010, Aleris has been owned and controlled by private equity firms Oaktree Capital Management LP (NYSE: OAK), Apollo Management LP (NYSE: APO), and Sankaty Advisors LLC owning minority interests. In July, Russia’s leading aluminum producer United Co. Rusal (SEHK: 486; EN: RUSAL; MCX: RUAL/RUALR) agreed to sell a 100% stake of its Alumina Partners of Jamaica (Alpart) to Jiuquan Iron & Steel Co. Ltd., a Chinese state owned enterprise, for $299 million. Rusal’s chairman, president, and largest shareholder is Russian billionaire Oleg Deripaska, the founder and owner of Basic Element, one of the largest Russian industrial groups, and president of En+ Group. The former metals trader “came back from the brink of collapse, facing margin calls and billions of dollars in debt triggered by the 2008 financial crisis,” according to Forbes, and has a net worth recently valued at $3.3 billion.]]>

China Zhongwang to Acquire Aleris From $OAK, $APO in $2.33B Aluminum Deal

China Zhongwang to Acquire Aleris From $OAK, $APO in $2.33B Aluminum Deal

Reuters, adding that Zhongwang has been accused of evading U.S. import duties on extruded products, prompting an investigation by the U.S. Department of Commerce. “Auto manufacturers like Ford Motor Co have been moving toward aluminum, which is lighter than steel, to reduce body weight of autos in order to improve gasoline mileage, which will reduce emissions,” Reuters added. “We are excited about this transition to strategic ownership as it will allow us to accelerate our strategy to expand our capabilities to support the production of high-value advanced materials for the global automotive and aerospace markets, while maintaining our position as a leading supplier to critical regional markets like building and construction,” said Sean Stack, president and CEO of Aleris. “This acquisition is an international expansion to establish a complementary business foothold, as I strongly believe in the potential and prospects of Aleris and the aluminum industry as a whole,” said Liu Zhongtian, in a bet that the nascent U.S. automotive aluminum sector will be the industry’s next big growth market. “I believe Aleris is well-positioned to capitalize on the positive demand trends we see globally,” he added. The deal is expected to close in the first quarter of 2017, subject to customary regulatory approvals and closing conditions. Credit Suisse acted as financial advisor to Aleris. Fried, Frank, Harris, Shriver and Jacobson LLP acted as legal advisors. Moelis & Co. advised the Aleris Board on certain aspects of this transaction. Paul, Weiss, Wharton & Garrison LLP acted as legal advisors to Oaktree Capital Management. Photo: Liu Zhongtian, Chairman, China Zhongwang Holdings. (SCMP/Dickson Lee)]]>