Skip to main content

Rio Tinto takes a $9 billion hit on Alcan

Rio Tinto announced its results for the year, the numbers were good, except for one tiny little problem.  They also took a write down on Alcan.  Rio bought Alcan at insane valuation in 2007 (just before the crisis), the figure if memory serves was $100 per share.  No other buyer could come up with a figure near that (rumours are that Alcoa was near $85).  So the company that Rio bought for $44 billion in 2007 is now worth slightly more than $36 billion.  BTW its not like Rio has been standing on its hands in terms of investments into Alcan.

On the bright side the CEO has agreed not take a bonus this year... 

Looking at the stock (up nearly 25% since mid December), shareholders seem largely unconcerned.  Granted that in the greater scheme of things $9 billion is peanuts, still its nice to see reality come knocking.  This was a bad deal, it is hard to say what will be the long term impact to Alcan going forward (in terms of capital allocation).   One thing for sure, Rio is selling aluminum assets -- $ 8 billion was "planned" in October -- my bet is more is to come...

Comments

Post a Comment

Popular posts from this blog

what people get wrong about tariffs

 The issue is simple. What percentage of the economy is dependent on tariff goods? The truth, is that the US economy is far more closed than people understand. People genuinely believe that all manufacturing has ceased to exist in the United States all given to China on the altar of woke policy the truth can be further from That statement. Only about 15% of US GDP is related to foreign trade. Of that amount, slightly more than half is from Canada in Mexico. And half of that is energy. What that means, is that about 7% of US GDP is tariff dependent. The proof in the pudding, is how little money tariff generates. People think that 30 or 50 billion is a lot it’s not in an economy that has $3 trillion. The impact on the US economy will be less visible but not absent. Inflation hasn’t occurred yet first because tests have hardly started to bite, but more importantly it’s such a small percent of the economy. Now certain things are critical. The rare earth metals from China were critical....
Post a Comment
Read more

Trump and Venezuela...

The US now owns Venezuela…and not in a good way.  America is not known for its nation building skills, and yet it now owns the disaster that is Venezuela.   Starvation and exodus are the natural progression.   In addition it will become a haven for narco-terrorists, more so than it already was. I am sure that Trump and his friends really thought that little attack very well…I guess that he will now attack Iran now.  
Post a Comment
Read more

The end of Tesla?

 it takes a special kind of idiot, to think that he can antagonize his entire customer base, and think that it will not impact his business. When Elon Musk went to work for Donald Trump, and created the doge department, he antagonized every liberal, and these people represent 90% of his client base.That’s not a brilliant move. Now Elon Musk is worth hundreds of billions of dollar, so he shouldn’t care a great deal, however, he needs to care because of several other issues. The cyber truck has been a disaster, most have had to be recalled because of defective glue, it’s not a truck, it’s not a car, it’s noisy, relatively uncomfortable, but great as a development platform. What Tesla has learned in making car manufacturing more seamless is truly amazing. The problem was that Elon Musk was so pissed with the Democrats, and with Joe Biden, in particular because of some slight, which were just plain stupid too. By the way, that he decided to support with hundreds of millions of dollar, ...
Post a Comment
Read more