(Ecofin Agency) – Alucam is struggling to recover from the consequences of Rio Tinto’s departure in 2014, and especially of a break in energy supply in 2018, which weakened the tanks. A new dynamic could emerge from a merger with Socatral, a more prosperous company which produces aluminum sheets.
During the year 2020, the Cameroonian Aluminum Company (Alucam) exported more than 49,000 tonnes of aluminum, according to data from the Bank of Central African States (BEAC). According to Invest in Cameroon, this is the second lowest volume of exports made by this company for a decade, after the poor performance of 2012, during which Alucam exported just over 30,000 tonnes of aluminum.
But overall, apart from the years 2015 and 2017, during which this industrial company was able to export more than 80,000 tonnes to the international market each year, aluminum exports to Cameroon have shown a downward trend for 10 years, according to the reports. Central Bank data. Better, since 2017, Alucam’s exports have fallen almost by half, from more than 80,000 tonnes in 2017 to only 49,000 tonnes in 2020.
This situation can be explained first by the turbulence that Alucam has been going through since the departure, at the end of 2014, of Rio Tinto, its strategic partner. Although Rio Tinto’s withdrawal from the company’s funding round did not have an immediate effect on aluminum exports (over 60,000 tonnes in 2016 and over 80,000 tonnes in 2015 and 2017), this was very damaging to the company’s financial results. In fact, in 2015, Alucam officially recorded a net loss of more than 10 billion FCFA.
The decline in exports will only take place from 2018, after a year 2017, however dynamic. In fact, in January 2018, Alucam was the victim of “a sudden break in energy which weakened all the tanks», Slowing his activity level. This incident will be accompanied by a drop in the production and exports of raw aluminum.
According to data from the Beac, these exports have successively increased from around 62,000 tonnes in 2018, to 52,000 in 2019 and only 49,000 in 2020. Coupled with the fall in the price of aluminum (-20% between 2017 and 2018, Editor’s note) on the international market, this drop in exports has had a significant impact on the company’s finances. As proof, it is now struggling to pay its energy consumption to the company Eneo, the concessionaire of the public electricity service in the country.
To give itself a little air, Alucam, which has been looking in vain for a new strategic partner since the withdrawal of Rio Tinto in 2014, has started, since June 2020, a merger-absorption process with Socatral, its subsidiary specializing in the production of aluminum sheets, whose financial health is much brighter.
But, we learn, this merger-absorption project, which will induce the transfer of assets (33.6 billion FCFA) and liabilities (15.9 billion FCFA) from Socatral to Alucam, as well as an increase in Alucam’s capital for an amount of more than 2 billion FCFA, remains dependent on its approval by the general meetings of the two entities. It also depends on the approval of the early dissolution of Socatral by its shareholders, the approval of the exchange parity and of the capital increase by the shareholders of Alucam, then the declaration of the transaction by the the competition authority in the context of merger control.
Brice R. Mbodiam