Alcoa announced on Sunday September 15 that it will sell its full ownership interest of 25.1% in its joint venture (JV) with Ma’aden in Saudi Arabia to its JV partner for approximately $1.1 billion.
The JV was created in 2009 as a fully integrated mining complex in Saudi Arabia, which currently holds the Ma’aden Bauxite and Alumina Company’s bauxite mine and alumina refinery as well as the Ma’aden Aluminium Company’s aluminium smelter and casthouse.
This announcement was followed on Monday September 16 by news that Ma’aden and Aluminium Bahrain (Alba) agreed to start due diligence toward a potential business combination.
“This potential combination will reshape the global aluminium industry, positioning the merged entity as one of the largest aluminium producers worldwide,” Alba said in a statement.
“This partnership will create a larger, vertically integrated global champion with significant synergies offering advantages such as expanded production capacity; enhanced global presence; improved [environmental, social and governance] performance; greater energy security; and significant shareholder value creation,” according to Alba.
The third pillar
Ma’aden issued yet another statement the following day, on Tuesday September 17, that it was acquiring Saudi Arabia’s Sabic Industrial Investments’ (Sabic) 20.62% share in Alba.
“As we continue in our growth journey, the acquisition of shares in a highly experienced, well developed regional and global aluminum player firmly supports our ambitions,” Ma’aden chief executive officer Bob Wilt of the acquisition.
“This week we have announced a number of transactions that align with our strategic intent to strengthen and expand our business both regionally and internationally, further building mining as the third pillar of the Saudi economy,” he added.
The Saudi Arabian state-owned oil and gas company Saudi Aramco owns 70% shares of both Ma’aden and Sabic.
“The transaction is indicative of Ma’aden’s continued growth and ambitions to grow 10x by 2040, with its aluminum business a core contributing factor to that strategy,” according to Ma’aden.
Diversifying away from oil and gas
“I think this all relates back to the [Gulf Cooperation Council’s] vision to diversify their revenue stream away from the traditional oil-based approach,” Farida said.
This is in line with Saudi Arabia’s Vision 2030 Program and the country’s aim to achieve net zero by 2060, according to Farida.
“There is also a stronger and united vision to enable key industries to achieve a certain level of carbon emissions in order to reach the net zero vision of 2030,” he said, adding that the Gulf countries had the appetite to accelerate the adoption of renewables and low-carbon production.
Saudi Arabia’s Vision 2030 program calls for achieving an energy mix of 50% renewable sources and 50% natural gas by 2030.
Under the program, mining is envisioned to become the “third pillar” of the country’s industrial foundation, after oil and gas, and petrochemicals.
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