Noranda to acquire St Ann and Gramercy from JV partner Century

US-based Noranda Aluminum Holding Corporation announced yesterday it plans to fully acquire St Ann Bauxite in Jamaica and Gramercy Alumina operations in the US from Century Aluminum Company, in a bid to recover the US$80 million it wrote-off over six months on the operations due to the global downturn. The company said the acquisition would allow it to "vertically integrate" its operations by securing alumina for its aluminium operations. US-based Noranda Aluminum Holding Corporation announced yesterday it plans to fully acquire St Ann Bauxite in Jamaica and Gramercy Alumina operations in the US from Century Aluminum Company, in a bid to recover the US$80 million it wrote off over six months on the operations due to the global downturn. "We also believe owning 100 per cent of these two operations represents an opportunity to enhance profitability as market pricing improves," stated Layle "Kip" Smith, Noranda's president in its financials released yesterday. Noranda and Century had a 50/50 joint venture in St Ann and Gramercy, but Century Aluminum Company announced in a press release "that it has reached an agreement to transfer the company's 50 per cent ownership interests" to Noranda. Neither company disclosed the price at which the operations would be sold. The transaction is expected to close in August, "at which point Century will have no ownership interest in either Gramercy or St Ann," stated Noranda. Century and Noranda will, however, enter into an agreement under which Century will purchase alumina from Gramercy in 2009 and 2010. Noranda's 50 per cent stake in the joint venture earned it US$15.1 million in EBITDA over the 12 months ending in June. Noranda however wrote off US$80.3 million in impairment which related to "its equity-method investment" in St Ann and Gramercy. "This impairment reflects second- quarter 2009 revisions to the company's assumptions about St Ann's future profitability and cash flows," stated Noranda in its financials. The company's announced acquisition comes despite its US$12-million net loss in its second quarter. The company is however profitable and over six months made net income of US$32.2 million on US$322 million in revenues. "Century has been a valuable partner for Noranda in this shared alumina production operation. We wish them the best going forward," said Layle K "Kip" Smith, Noranda's president and chief executive officer in its financials. "Our action to become the sole owner of the Gramercy alumina refinery and the St Ann bauxite mining operations is consistent with our vertical integration strategy and our continuing desire to have a secure strategic supply of alumina." Century and Noranda jointly acquired Gramercy and St Ann from Kaiser Aluminum and Chemical Corporation in 2004 and have each owned 50 per cent of these businesses since that time. Gramercy owns and operates a 1.2 million metric tonne-per-year annual capacity alumina refinery located in Louisiana and St Ann owns and operates a 4.8-million-metric- tonne-per-year annual capacity bauxite mining operation in Jamaica. As a result of the economic crisis, Gramercy and St Ann have been producing at approximately 50 percent and 40 per cent of their rated capacities since early 2009. "Our five-year association with Noranda, Gramercy and St Ann has been mutually beneficial, and we have enjoyed working with the outstanding teams that manage these businesses," said Century executive vice president and chief operating officer Wayne Hale in a press release. "This transaction will increase our focus on Century's core aluminium smelting business and our attractive growth projects. In addition, the full curtailment of Ravenswood and partial curtailment of Hawesville have reduced our alumina requirements. We have attractive contracts in place which will supply our alumina needs over the next several years." Century Aluminum Company owns primary aluminium capacity in the United States and Iceland. Century's corporate offices are located in Monterey, California.