Alcoa Bets on Aluminum Boom With $5.6 Billion South32 Deal

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(Bloomberg) — Alcoa Corp. agreed to buy South32 Ltd.’s bauxite, alumina and aluminum assets in Australia, Brazil and South Africa in a deal valued at as much as $5.6 billion, cementing its position among the world’s largest aluminum producers as long-term demand strengthens.

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The US producer will pay $3.1 billion in cash and about $1 billion in Alcoa shares, while assuming $750 million of net debt and lease liabilities, according to statements from the companies on Wednesday. South32 could receive an additional $750 million if alumina and aluminum prices exceed agreed thresholds over the next four years. The transaction excludes an idled smelter in Mozambique, which South32 said remains under strategic review.

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The acquisition significantly expands Alcoa’s integrated aluminum business, strengthening its position as one of the world’s largest producers by adding assets across the entire value chain, from bauxite mining to alumina refining and aluminum smelting. 

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The larger portfolio increases Alcoa’s exposure to growing global aluminum demand from the energy transition and artificial intelligence while boosting its alumina production, a market that has experienced sharp price volatility in recent years due to supply disruptions. The deal also broadens Alcoa’s geographic footprint, deepening its presence in Australia and Brazil while establishing a new operating base in South Africa.

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It comes as aluminum producers position themselves for stronger long-term demand from electric vehicles, electricity transmission, renewable energy, packaging and aerospace. Aluminum has also become increasingly important in power grids because of its lower cost and lighter weight than copper, making it an attractive substitute in some transmission applications.

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Prices of the metal are up 3% this year after supply disruptions in a region accounting for nearly a tenth of global output fueled a rally between March and May. Those gains were later pared as prospects for an end to the Iran war eased supply concerns.

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Alcoa said the acquisition would lift its pro forma annual production to 3.2 million metric tons of aluminum and 14.8 million tons of alumina, while generating about $900 million in net present value through operational synergies. The company expects the transaction to immediately increase earnings per share and free cash flow.

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The deal is expected to close in the first half of 2027, subject to shareholder and regulatory approvals.

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—With assistance from Wendy Wells and Jacob Lorinc.

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