Investing.com -- Alcoa Inc (NYSE:AA) announced on Wednesday that it is selling its stake in a major Australian natural gas pipeline to the Duet Group for $154 million.
Under the deal, Alcoa will sell its holdings in DBP, the operator of the Dampier to Bunbury Natural Gas Pipeline (DBNGP), one of the world's largest pipelines at the time of its commission in 1984. Prior to the sale, Alcoa owned approximately 20% of the subsidiary, while the Duet Group controlled the other 80%. The pipeline, which stretches about 660mm in diameter, travels from the northwest corner of Australia to Bunbury, located just south of Perth.
As part of the arrangement, Alcoa said it will maintain its current access to approximately 30% of DBNGP transmission capacity for gas supply to its three alumina refineries in Western Australia. Alcoa, which owns two bauxite mines in Western Australia, controls one of the world's largest bauxite mining operations in the world.
The company also runs three aluminum refineries in the region and an aluminum smelter in Victoria. Alcoa produces almost 18% of the nation’s total in aluminium, representing nearly 10% of the world total demand, according to the company.
Alcoa expects to realize a gain anywhere between $10 million and $15 million, after-tax and non-controlling interest, or $0.01 per share from the sale. Once the transaction is completed, Alcoa anticipates the net cash impact of the sale to be around $115 million, after fees and taxes are accounted for.
Shares in Alcoa inched up 0.03 or 0.31% to 9.72 in after-hours trading.