Kaiser sells off part of Aussie refinery
$189 million sale will allow Kaiser to reduce its nearly $1 billion debt
John Stucke - Staff writer
Kaiser Aluminum Corp. will sell part of its stake in a refinery that supplies the company's Mead and Tacoma smelters.
Kaiser announced Sunday it will sell an 8.3 percent interest in Queensland Alumina Limited for $189 million.
After the sale to Comalco Limited, Kaiser will still retain a 20 percent ownership of Queensland, a partnership of four companies. The joint venture operates the Gladstone refinery on Australia's eastern seaboard. Gladstone is the world's largest alumina refinery.
Kaiser spokesman Scott Lamb said the sale will not jeopardize the company's alumina supply to its Washington smelters. Alumina is refined from bauxite and shipped to smelters, where it is heated, mixed with chemicals and subjected to massive electric current to make aluminum.
"In a typical year with Northwest operations running full, we would supply Mead and Tacoma from QAL," Lamb said. "Obviously, this is not a normal year, because we are not operating."
Since late last year, Kaiser has sold its alumina in the open market rather than shipping it across the Pacific Ocean to the Northwest. Kaiser idled its smelters last year when electricity prices rose.
Lamb said Kaiser will replace the alumina capacity -- about 300,000 metric tons -- by boosting production at its Alpart refinery in Jamaica and restarting its Gramercy, La., refinery within two years.
"Bear in mind that we have a fair amount of flex in our system," he said.
The sale is one of several asset transactions Kaiser is considering, Lamb said. He declined to comment on whether Kaiser's factories in the Northwest might be sold.
"That's just something we cannot comment on," he said. "We are continuing to have some discussion on potential transactions, but we are not at a point where any one of those has progressed to the point of making an announcement."
The $189 million deal with Comalco Limited eases some of Kaiser's debt of nearly $1 billion, and gives the company some operating cash.
Comalco will assume about $30 million of Kaiser's debt leveraged on the Queensland property.
The remaining $159 million will be used to meet other maturing notes, pay taxes and handle other costs from the sale.
Kaiser stands to net $75 million in after-tax cash from the sale.
He did not elaborate on how the money will be spent. That will be disclosed on the company's balance sheet once the cash flows from Comalco to Kaiser.
When the sale is completed, the ownership of Queensland will be as follows: Kaiser (20 percent), Comalco (38.6 percent), Alcan (21.4 percent), and Pechiney (20 percent).