The transaction will be an all-stock deal worth US$2.2Bn.

US-headquartered integrated aluminium producer, Alcoa, has entered into a binding agreement to acquire the shares of its long-standing Australian partner, Alumina Ltd in the AWAC JV. The deal will consolidate the ownership of assets including five bauxite mines and six alumina refineries, as well as an aluminium smelter and shipping company. Currently, Alcoa owns 60% of AWAC and Alumina Ltd 40%.

The announcement follows a trend for upward integration and securing feedstock in the aluminium value chain. Alumina is the major raw material used in primary aluminium production and is produced by the refining of bauxite. Such market activity comes at a time when Chinese aluminium producers continue to strengthen their dominance of the industry, accounting for a little under 60% of global primary supply last year according to International Aluminium Institute estimates.

It also represents a vote of confidence for the Australian aluminium sector. Last July, Rio Tinto wrote of A$1.7Bn (US$1.2Bn) of aluminium refineries, which it attributed to the mounting costs of Australia’s carbon emissions reduction scheme.

Aluminium’s key role in energy transition applications means that the metal has a strong outlook over the coming years.