Novelis, the global leader in aluminum rolling and recycling, and part of Aditya Birla Group, has sold 50% stake in its Ulsan aluminum plant in South Korea to Kobe Steel of Japan for $315 million to form a 50-50 joint venture — Ulsan Aluminum. Both companies will jointly own and operate the Ulsan facility, bringing in metal supplies and maintaining their commercial relationships, the company said in a statement on Wednesday.
The joint venture transaction is expected to close in September 2017, subject to customary approvals. Through the joint venture the company also expects to better utilise its rolling capacity at Ulsan, which will continue to focus on automotive and specialty sheet in order to meet the increasing demand for lightweight rolled aluminum products across Asia, the company said.
The cash proceeds will be used to enhance strategic flexibility and reduce net debt, the company said in a statement. The company recently refinanced its $4.5-billion debt which will help them save $80 million per annum on interest.
Novelis’ Ulsan plant, which employs around 600 workers and focuses on production of rolled aluminum sheet, believes the JV will help them drive operational efficiencies and process enhancements across its plants in Asia.
Through this joint venture, Novelis’ Ulsan facility, along with its Yeongju facility in South Korea and its Changzhou facility in China, will be better positioned to deliver innovative, value-added products and services to customers, the statement said.
“As a company, we constantly identify business opportunities that allow us to deliver maximum value across our global operations and we continue to see Asia as a strategic market,” said Steve Fisher, president and chief executive officer of Novelis. Novelis’ Ulsan facility employs around 600 people and currently focuses on the production of rolled aluminum sheet.