Novelis has started a joint venture agreement with Kobe Steel, a producer of aluminium rolled products in Japan.
The joint venture, to be known as Ulsan Aluminium, will be formed by Novelis selling Kobe Steel 50% of its ownership interest in its Ulsan, South Korea facility for US$315m. Through the venture, Novelis and Kobe Steel will jointly own and operate the Ulsan facility, with each company remaining responsible for its metal supply and commercial relationships.
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The transaction is expected to close in September this year, subject to customary closing conditions.
Through the JV, Novelis maintains it will utilise its rolling capacity at Ulsan more effectively, which will continue to focus on automotive and speciality sheet in order to meet the increasing demand for lightweight rolled aluminium products across Asia.
Novelis’ Ulsan facility, along with its Yeongju site in South Korea and its Changzhou facility in China, will be positioned to deliver value-added products and services to customers. The transaction will generate cash proceeds to reduce net debt.
“As a company, we constantly identify business opportunities that allow us to deliver maximum value across our global operations and we continue to see Asia as a strategic market,” said Novelis president and CEO, Steve Fisher.
“By entering into this joint venture, we are able to leverage our experience with other joint ventures to more efficiently serve our customers and increase our strategic flexibility in order to capitalise on potential future market opportunities.”
Located in the industrial hub of Korea, Novelis’ Ulsan facility employs around 600 people and currently focuses on the production of rolled aluminium sheet for a variety of markets in Asia.
The plant recently completed a major expansion, adding a new three-stand hot finishing mill as well as a pusher furnace and annealing furnaces.
