Novelis Inc., the world leader in aluminum rolling and recycling, announced today that it has entered into a joint venture agreement with Kobe Steel, Ltd., a producer of aluminum rolled products in Japan. The joint venture, to be named Ulsan Aluminum, Ltd., will be formed by Novelis selling Kobe Steel 50 percent of its ownership interest in its Ulsan, South Korea facility for US $315 million. 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. The joint venture transaction is expected to close in September 2017, subject to customary closing conditions.
By entering into this joint venture, Novelis will better utilize its rolling capacity at Ulsan, which will continue to focus on automotive and specialty sheet in order to meet the increasing demand for lightweight rolled aluminum products across Asia. Partnering with another world-class manufacturing company will allow Novelis to drive operational efficiencies and process enhancements. As a result, Novelis’ Ulsan facility, along with its Yeongju facility in South Korea and its Changzhou facility in China, will be better positioned to deliver innovative, value-added products and services to customers. The transaction will generate cash proceeds to enhance Novelis’ strategic flexibility and reduce its 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 Steve Fisher, President and Chief Executive Officer of Novelis. “By entering into this joint venture, we are able to leverage our deep experience with other successful joint ventures to more efficiently serve our customers and increase our strategic flexibility in order to capitalize on potential future market opportunities.”
Located in the industrial hub of Korea, Novelis’ Ulsan facility employs approximately 600 people and currently focuses on the production of rolled aluminum 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.