Operations - Capital Plan

Global Alumina’s capital plan is based on project financing principles in which specific risks are allocated contractually to credit-worthy parties best suited to manage such risks.  The expected outcomes include higher project debt levels and lower sponsor equity support and related costs. 

Reducing Risk, Adding Value

Global Alumina raised development equity capital at its best value only as and when required in order to minimize its cost of capital (dilution) while removing high early stage development risks.  The Company likewise sought to remove risks and add value with each round of capital raised.  Examples include the early-stage involvement and equity and off-take options of Mitsubishi and Marubeni; the 2004 unit offering that ultimately brought us to the Toronto Stock Exchange and access to deep public equity markets; and DUBAL’s initial investment and commitment to purchase alumina under a long-term contract.  The final and most significant example is the joint venture transaction that brought BHP Billiton’s wealth of experience, DUBAL’s well-recognized expertise in aluminum smelting and keen interest in developing a strategic foothold in bauxite and alumina properties, and Mubadala, who together with DUBAL, brings financial and professional management expertise and a strategic mandate to develop a significant bauxite and alumina business.

The international development community has long held that development of the upstream bauxite processing industry to be the centerpiece of Guinea’s poverty alleviation plan.  In this light, Global Alumina retained Citibank as Guinea Alumina’s financial advisor and commenced a dialogue in 2004 with a group of leading multilateral, bilateral and export credit agencies and a select group of commercial banks to form the foundation of an approximately $2 billion project financing.  The lender group followed Global Alumina’s development progress with keen interest, and recognizes the substantial value added through the recently consummated Guinea Alumina joint venture and the direct involvement of BHP Billiton, DUBAL and Mubadala.