Aluminum Corp. of China to Acquire Controlling Stake in Brazilian Aluminum Producer
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Source: seekingalpha
- Acquisition Plan: Aluminum Corp. of China is close to announcing a deal to acquire controlling ownership of Companhia Brasileira de Aluminio, which would grant Rio Tinto a one-third stake, significantly enhancing Chinalco's influence in the global aluminum market.
- Investment Context: Brazil's Grupo Votorantim is seeking a partner for a $2.5 billion investment in CBA's Projeto Rondon to develop a bauxite mine in the Amazon, and Chinalco's acquisition will provide necessary funding for this project.
- Market Valuation: CBA has a market value of approximately 6.7 billion reais ($1.2 billion), with Chinalco and Rio Tinto reportedly set to pay 10.50 reais per share, slightly above the current price of 10.35 reais, indicating confidence in CBA's future growth.
- Strategic Implications: This acquisition will not only allow Chinalco to control CBA but also enable it to propose acquiring stakes from minority investors through a public offering, further solidifying its position in the South American market and driving global business expansion.
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Analyst Views on RIO
Wall Street analysts forecast RIO stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for RIO is 83.70 USD with a low forecast of 68.00 USD and a high forecast of 129.50 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
6 Analyst Rating
2 Buy
4 Hold
0 Sell
Moderate Buy
Current: 93.370
Low
68.00
Averages
83.70
High
129.50
Current: 93.370
Low
68.00
Averages
83.70
High
129.50
About RIO
Rio Tinto plc is a United Kingdom-based mining and materials company. It operates in over 35 countries, and its portfolio includes iron ore, copper, aluminum and a range of other minerals and materials. Its segments include Iron Ore, Aluminum, Copper, and Minerals. The Iron Ore segment includes iron ore mining and salt and gypsum production in Western Australia. Its iron ore operations in Pilbara comprise an integrated network of over 18 iron ore mines and four independent port terminals. The Aluminum segment includes bauxite mining, alumina refining, and aluminum smelting and recycling. The Copper segment includes mining and refining of copper, gold, silver, molybdenum, other by-products and licensing of extraction technologies. The Minerals segment includes mining and processing of borates, diamonds, iron concentrate and pellets from the Iron Ore Company of Canada, lithium and titanium dioxide feedstock.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Aluminum Corp. of China to Acquire Controlling Stake in Brazilian Aluminum Producer
- Acquisition Plan: Aluminum Corp. of China is close to announcing a deal to acquire controlling ownership of Companhia Brasileira de Aluminio, which would grant Rio Tinto a one-third stake, significantly enhancing Chinalco's influence in the global aluminum market.
- Investment Context: Brazil's Grupo Votorantim is seeking a partner for a $2.5 billion investment in CBA's Projeto Rondon to develop a bauxite mine in the Amazon, and Chinalco's acquisition will provide necessary funding for this project.
- Market Valuation: CBA has a market value of approximately 6.7 billion reais ($1.2 billion), with Chinalco and Rio Tinto reportedly set to pay 10.50 reais per share, slightly above the current price of 10.35 reais, indicating confidence in CBA's future growth.
- Strategic Implications: This acquisition will not only allow Chinalco to control CBA but also enable it to propose acquiring stakes from minority investors through a public offering, further solidifying its position in the South American market and driving global business expansion.
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Rio Tinto and Chalco Form Joint Venture to Acquire Votorantim's Stake in CBA
- Transaction Agreement: Rio Tinto and Chalco have signed a definitive agreement to acquire Votorantim's 68.596% controlling stake in Companhia Brasileira de Alumínio (CBA) for R$10.50 per share, representing a 21.2% premium over the average price prior to the agreement, potentially yielding Rio Tinto a $297.8 million return on investment.
- Joint Venture Structure: The joint venture will be owned 33% by Rio Tinto and 67% by Chalco, enhancing operational synergies across the aluminium value chain and driving CBA's low-carbon aluminium production to meet the growing domestic market demand.
- Renewable Energy Support: CBA operates with a 1.6 GW portfolio of renewable energy assets, including 21 hydropower plants and wind complexes, ensuring its aluminium production is powered entirely by 100% renewable electricity, aligning with global low-carbon transition trends and enhancing market competitiveness.
- Subsequent Acquisition Plans: Following the transaction's completion, the joint venture will launch a mandatory tender offer for the remaining shares in CBA as required by Brazilian law, further solidifying its leadership position in the Brazilian aluminium market.
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