Vale sells assets to Norsk Hydro in $4.9 billion deal

 Vale (VALE-N) rmay be locked in a 10-month labour dispute in Canada but it is making headway in Europe where it has sold its Brazilian bauxite and aluminium businesses to Norway’s Norsk Hydro in a US$4.9 billion deal.

Vale is selling part of Paragominas in Brazil, the world’s third-largest bauxite mine, as well as its alumina refining and aluminium production facilities. (Hydro has the right to take over the remaining 40% of Paragominas in two installments, in 2013 and 2105, respectively.)

The deal includes Vale’s 91% stake in the Alunorte alumina refinery, 51% of the Albras aluminium plant, and 81% of the CAP alumina refinery project. (Norsk Hydro already owned a 34% stake in Alunorte and 20% of CAP.)

The Oslo-based company will pay Vale US$1.1 billion in cash, with the remainder in new Norsk Hydro shares and US$700 million of assumed net debt.

Once the transaction is completed Vale will hold a 22% stake in the Oslo-based company and is not allowed to increase that stake and must retain its shares in Hydro for a minimum of two years.

Norsk Hydro is the third-largest aluminium maker in Europe and is 43.8% owned by the Norwegian government.

The Paragominas mine has an annual capacity of 9.9 million tonnes. An expansion plan will see capacity expand a further 15 million tonnes. Alunorte has an annual capacity of 6.3 million tonnes and Albrasa an annual capacity of 455,000 tonnes. All of the assets being sold are in Brazil.

The transaction is expected to close in the fourth quarter of this year.