China's CITIC buys $467 mn stake in Australia's Alumina
China has had to increase imports of alumina after Indonesia last year clamped down on exports of bauxite, which is used to produce alumina, which is then turned into aluminium. Its alumina imports nearly tripled in 2012 from the year before.
CITIC Resources, which already owns a direct 22.5 percent stake in AWAC's Portland aluminium smelter, said in a statement it considers aluminium a "key strategic commmodity".
An analyst said with bauxite supply likely to tighten by the end of this decade, CITIC's move on Alumina could help it lock in supplies down the track.
"For me it's a longer term strategic deal to secure supply. Some big projects in West Africa are a bit shaky. Indian deposits look like they will be relatively difficult to access. The bauxite market is going to get tighter from about 2017," said ANZ commodities strategist Nick Trevethan in Singapore.
As it stands, the share sale to CITIC does not involve any supply agreement.
CITIC agreed to pay A$1.235 a share for the equity stake in Alumina. Alumina's shares surged to a 14-month high of A$1.405 after the announcement and last traded up 8 percent at A$1.30, outpacing the broader market.
The struggling aluminium industry won another fillip this week when Rio Tinto agreed to keep open its Australian Gove alumina refinery, after securing gas supply from the Northern Territory government, crucial to cutting costs at the loss-making plant.
CITIC Resources previously owned a 25 percent stake in Macarthur Coal, and
Be the first to comment.