Hydro is already Europe’s third-largest producer of aluminium. The deal with Vale includes the company’s 9.9Mt/y Paragominas bauxite mine, along with its aluminium refining and production facilities in Brazil.

Hydro will combine the majority of Vale’s bauxite and alumina assets with its existing business.

Hydro has secured bauxite supplies for 100 years as part of the agreement.

On completion Hydro will have full control and ownership of Paragominas, one of the largest bauxite mines in the world, a 91% ownership in the 6.3Mt/y Alunorte alumina refinery, a 51% stake in the 455kt/y Albras aluminium plant and an 81% stake in the 1.86Mt/y CAP alumina refinery.

The Norwegian metal producer will pay a $1.1bn cash component and the remainder in stock that gives Vale a 22% stake in the business.

Hydro will also assume $700M in debt. The Norwegian government's stake in the company will fall to 34.5% from 43.8% to 34.5%. Vale will receive 22% ownership in Hydro as part of the deal.

The transaction also comprises additional bauxite licenses, a volume off-take agreement for Vale’s 40% stake in the MRN bauxite mine, in which Hydro holds a 5% ownership and an alumina sales contract portfolio.

Around 3600 Vale employees will be employed by Hydro as a result of the transaction