Alumina fears weak partner

Alumina says it is concerned about a “new and financially weaker” Alcoa as its operating partner in the billion-dollar AWAC venture as tense talks between the warring factions spilled into the public arena.

The Melbourne-based company, which owns 40 per cent of Alcoa World and Alumina Chemicals (AWAC) that dominates WA’s alumina landscape, revealed yesterday why it was opposed to partner Alcoa’s historic demerger. The demerger, to happen in the second half of this year, will separate Alcoa’s bauxite, alumina and aluminium assets, dominated by AWAC, from the higher-margin specialty metals unit.

Alumina says the demerger will have a “material adverse change in the nature, size, scope and financial wherewithal” of its AWAC partner and warrants “amendments to the AWAC joint venture agreements to protect the interests of Alumina”.

Although Alumina did not spell out the amendments, it is thought marketing rights form part of its compensation demand. Alumina also claims the demerger triggers pre-emptive rights held by it over Alcoa’s AWAC stake, which is the bargaining chip.

Alcoa launched legal action in the US on Friday night to prevent Alumina from derailing the demerger. It has dismissed Alumina’s claim the demerger triggers pre-emptive rights.

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