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Sources say that Emirates Global Aluminium is interested in acquiring Brazilian aluminum firm CBA.

Two sources have confirmed that Emirates Global Aluminium, based in the United Arab Emirates, is looking to acquire Companhia Brasileira de Aluminio. The Brazilian producer's operation along the entire production line has made it a desirable target.

People with knowledge of the matter claim that Morgan Stanley, which is the investment banking advisor to EGA and jointly owned by Abu Dhabi sovereign fund Mubadala, and the Dubai sovereign fund Investment Corporation of Dubai (both Abu Dhabi-based sovereign funds), is working on a potential deal with Morgan Stanley.

According to LSEG, CBA's market capitalisation was $487 million at Monday's closing.

Two sources requested anonymity as the matter was private. Could not determine if a proposal has been made.

CBA produces low-carbon aluminum in seven Brazilian states, where Brazilian conglomerate Votorantim SA owns a 69% share according to LSEG.

The company's operations cover the entire aluminum production chain from bauxite extraction and refinement to smelting, and diverse primary aluminium products.

CBA, a "total asset", is a "comprehensive asset" that includes upstream operations, own mines, and access to bauxite. This could improve an investor's position in the market, according to one source.

EGA stated that it continuously evaluates opportunities for growth but does not comment upon market rumours or speculation. CBA, Morgan Stanley, and Votorantim declined comment. EGA had predicted that the volatility of aluminium prices in 2018 would be due to global trade tensions. President Donald Trump imposed tariffs for steel and aluminum imports to the United States. This is a major market for United Arab Emirates' suppliers. EGA was one of a group companies that signed deals worth $200 billion with the Trump Administration after the president visited the region in may. EGA announced that it would invest $4 billion to build a primary aluminium smelter in Oklahoma. This will be the first "primary" aluminum production plant built in the U.S. in over 30 years.

The plans will be subject to the availability of a long-term competitive power supply, as well as state and local incentives for investment and tax credit arrangements. According to the company, it is in advanced discussions with Public Service Company of Oklahoma and the Oklahoma Government. EGA reported in March that its annual net profit in 2024 would be down by 23,5% as a result of an impairment charge due to the suspension of exports of its operations in Guinea, and the introduction of corporate tax in United Arab Emirates. Luciana Magnhaes reported from Sao Paulo; Hadeel al Sayegh reported from Dubai; and Anirban SEN in New York. Additional reporting Tatiana Bautzer. Anousha Sakoui, Sharon Singleton and Anousha Saoui edited the article.

(source: Reuters)