(Bloomberg) -- Saudi Arabia has announced three deals in as many days as the oil-rich kingdom looks to accelerate the expansion of its metals and mining industry.
On Tuesday, Saudi Arabian Mining Co., known as Maaden, said it was buying a 21% stake in Aluminium Bahrain B.S.C. from a Saudi Basic Industries Corp. in a deal worth more than $1 billion. That essentially moves the holding from one state-backed company to another, but it’s also another step toward consolidating the aluminum operations of Bahrain and Saudi Arabia in an enlarged entity that will have Maaden as a major shareholder.
Saudi Arabia’s de facto ruler, Crown Prince Mohammed bin Salman, has laid out plans for mining and metals to be the so-called “third pillar” of the economy in Vision 2030. That’s being driven by Manara Minerals — which is snapping up overseas assets including 10% of Vale SA’s base metals business — while Maaden has been tasked with growing the domestic industry.
The latest Maaden deal follows closely on two others that have the potential to reshape Saudi Arabia’s influence on the global aluminum trade at a time when Russia’s invasion of Ukraine — as well as supply-chain bottlenecks — are already roiling global markets.
On Sunday, Maaden bought out long-term partner Alcoa Corp. from two aluminum plants in the kingdom, handing over $1.1 billion in cash and stock for the stakes. The logic for the deal soon became apparent, when the following day Maaden said it was exploring a merger of its aluminum assets with Aluminium Bahrain B.S.C., known as Alba.
Maaden said it’s pursuing the deal with Alba that would see it sell its aluminum, bauxite and alumina units to the Bahrain company in exchange for shares in the combined entity.
The companies also agreed to seek a cross-listing of Alba shares on the Saudi stock exchange. The companies signed non-binding heads of terms, and the proposal is pending regulatory approvals.
“This week we have announced a number of transactions that align with our strategic intent to strengthen and expand our business both regionally and internationally, further building mining as the third pillar of the Saudi economy,” Maaden Chief Executive Officer Bob Wilt said.
Maaden and Alba have become major players in the global aluminum industry in recent years, particularly in value-added products that have historically been dominated by a handful of suppliers. The expanded company would be one of the world’s biggest aluminum producers.
©2024 Bloomberg L.P.
