Hindalco Acquires Novelis Do Brasil, Will Add To Aluminum Overcapacity

The metals flagship of India’s Aditya Birla Group, Hindalco Industries, recently announced that as part of its corporate reorganization plan it had finalized arrangements for acquiring the alumina refinery Novelis Do Brasil, a wholly owned subsidiary of Novelis.

Novelis Do Brasil suspended the production of alumina at this refinery in 2009. With the Novelis addition, Hindalco becomes the world’s largest aluminum rolling company and one of the biggest producers of primary aluminum in Asia.

The 145,000-ton-per-year alumina refinery is located in Ouro Preto, in the state of Minas Gerias in Brazil, and has a right of carrying on mining activities over 50 million tons of bauxite reserves. The alumina assets of Novelis Do Brasil would be transferred to the new company being developed in Brazil and the shares of the company would be acquired by AV Minerals.

A report in The Indian Express quoting company officials said the agreement was worked out between Novelis Do Brasil, Novelis and AV Minerals (Netherlands), a wholly-owned subsidiary of Hindalco Industries.

Hindalco has already issued a notification to the Bombay Stock Exchange about this development. The acquisition will take place after all necessary approvals and permits for restarting the idle facilities and operations of the company are obtained in Brazil, it said.

In 2007, Novelis was acquired by Hindalco Industries and following the merger, Novelis became a wholly owned subsidiary of Aditya Birla Group.

The company said this corporate reorganization will allow the new company to create value out of the mothballed assets. Novelis Do Brasil, on the other hand, will continue to focus on its core downstream aluminum rolling business.

Besides Ouro Preto, Novelis has two other manufacturing units at Pindamonhangaba and Utinga in Brazil. The plant at Ouro Preto produces primary aluminum in the form of plates and billets, Soderberg pulp mill and power generation plants.

According to The Hindu Businessline, the Pindamonhangaba facility had recently undergone significant expansion to widen its competitive advantage in the Brazilian aluminum rolling activities.

The unit focuses on the production of aluminum-rolled sheets to supply the packaging, automotive and civil construction segments. After expansion, the unit became the largest South American recycling center with an 80,000-ton-per-year recycling capacity.

Through the Novelis vertical, Aditya Birla Group owns a number of aluminum assets in North and South America, including the plant located in Ouro Preto. The Aditya Birla Minerals vertical so far has been engaged in copper mining in Australia.

by Sohrab Darabshaw