Alcoa splits into two companies as auto industry demands more aluminum

Tesla Model S Aluminum Body

Aluminum colossus Alcoa (NYSE:AA) has approved a plan to split into two independent, publicly-traded companies, referred to for now as the Upstream Company and the Value-Add Company. The transaction is to be completed in the second half of 2016.

Global aluminum demand is expected to double between 2010 and 2020, driven partly by the light metal’s increasing use in vehicles. Alcoa is sure to remain a major player.

The Upstream Company will be the world’s fourth largest aluminum producer, and will include the world’s largest bauxite mining portfolio, with 46 million bone-dry metric tons of production in 2014.

The Value-Add Company will be a supplier to the aerospace and vehicle industries. Automotive revenues are expected to more than double by 2018, to $1.8 billion.

“In the last few years, we have successfully transformed Alcoa to create two strong value engines that are now ready to pursue their own distinctive strategic directions,” said CEO Klaus Kleinfeld. “The upstream business is now built to win throughout the cycle. Our multi-material value-add business is a leader in attractive growth markets.”

 

Source: Alcoa via Green Car Congress
Image Courtesy of Tesla Motors