Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Alcoa Corporation is set to sell its rolling mill business, Alcoa Warrick, to Kaiser Aluminium, a transaction expected to conclude by Q1 2021. The consideration for the transaction is pegged at $670mn, with $587mn cash and $83mn for post-retirement employee benefit liabilities.


Alcoa will, however, continue to operate the aluminium smelter with an annual capacity of 269,000mt and the power plant at the Warrick site by entering into a ground lease agreement with Kaiser. After the sale, Alcoa and Kaiser will enter into a market-based metal supply agreement, as per a press release by Alcoa.


Alcoa has recently adopted a strategy to focus on core markets while generating additional cash, according to the company President and CEO Roy Harvey.


The rolling mill has an annual capacity to produce 310,000mt flat-rolled aluminium, used for packaging. With the conclusion of the sale, Alcoa has estimated its sales to decline by $800mn. Adjusted EBITDA could decline by $90-100mn.


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