Alcoa Corporation has announced that it has amended its joint venture with the Saudi Arabian Mining Company (Ma’aden) in which Alcoa holds a minority, 25.1 percent stake.

The joint venture was created in 2009 as a fully integrated aluminium complex in the Kingdom of Saudi Arabia, comprised of three entities: the Ma’aden Bauxite and Alumina Company (MBAC; the bauxite mine and alumina refinery), the Ma’aden Aluminium Company (MAC; the aluminium smelter and cast house), and the Ma’aden Rolling Company (MRC; the can and auto sheet mill).

As a result of the amended joint venture agreements, signed June 26, 2019, and expected to close by month end:

- Alcoa will transfer its 25.1 percent interest in MRC to Ma’aden
- Alcoa to make a contribution to MRC in the amount of $100 million paid in two instalments: 1) $34 million paid on June 17, 2019 to fund its 25.1 percent share of MRC’s current cash requirements, and 2) $66 million paid at closing
- Alcoa is released from all future MRC obligations, including Alcoa’s sponsor support of approximately $295 million of MRC debt and its share of any future MRC cash requirements
- Alcoa will avoid future capital contributions in any MRC debt restructuring and recapitalisation
- Alcoa and Ma’aden further defined MBAC and MAC shareholder rights, including the dividend policy
- The parties will maintain their commercial relationship, which includes Alcoa providing sales, logistics and customer technical services support for MRC products for the North American can sheet market.

The company will retain its 25.1 percent minority interest in MBAC and MAC, and Ma’aden will continue to own a 74.9 percent interest.

“The Ma’aden joint venture aluminium complex has been an integral part of our portfolio, and we greatly value our relationship with our Saudi partners,” said Alcoa President and Chief Executive Officer Roy Harvey. “As we look ahead, divesting Alcoa’s investment in MRC enables us to pursue future returns in our bauxite mining, alumina refining, and aluminium smelting businesses and gives Ma’aden more strategic flexibility to further develop the rolling business.”

Alcoa will record an estimated charge associated with the disposition of its interest of approximately $320 million (pre- and after-tax), or $1.72 per share, in the second quarter of 2019. The charge includes the write-off of Alcoa’s investment in MRC, the cash contributions noted above, and the write-off of Alcoa’s share of MRC’s delinquent payables due to MAC of $59 million that were forgiven as part of this transaction. Investment losses attributable to MRC included in net income totalled $34 million (pre- and post-tax) in 2018.