Venezuela’s biggest aluminium smelter, Venalum, could be heading for a fresh start as Mercuria Energy Group Ltd. and Glencore Plc explore a potential deal that could bring new investment and operating expertise to the facility that has spent years producing only a fraction of its original capacity.
The talks come as Venezuela seeks to rebuild an industrial sector weakened by economic turmoil, power shortages and years of underinvestment. Discussions with the Venezuelan government have included the possibility of taking over operations at the Venalum smelter and securing access to the aluminium it produces, according to Bloomberg News.
Mercuria is working with private mining investment firm Heeney Capital on the potential transaction. The two companies have previously worked together on deals in Venezuela involving access to the country’s commodities and metals.
Venalum, also known as CVG Venezolana del Aluminio, is a state-owned aluminium producer based in Puerto Ordaz, Bolívar state. The smelter has capacity to produce roughly 430,000 tonnes of primary aluminium a year and is located near Venezuela’s hydroelectric power resources and bauxite reserves.
Glencore has ties to Venezuela’s state-owned aluminium industry dating back more than two decades and has previously provided financing to the country’s aluminium producers. The potential deal comes as the US seeks greater influence over Venezuela and its mineral and oil resources.
The discussions come amid a tighter aluminium market, with prices up about 9 per cent this year and hitting a three-week high earlier this month driven by supply concerns linked to tensions in the Middle East. China, the world’s largest aluminium producer, is also operating close to its government-imposed smelting capacity limit.