Glencore reduces Century Aluminum stake from 33% to 33% following tariff-driven rally

Glencore cut its stake in Century Aluminum from 10% to 33%. This has resulted in millions of dollars in profit following the share price rally that was sparked by U.S. Tariffs on Aluminium Imports.

On June 4, U.S. president Donald Trump increased the tariffs on aluminum imports from 25% to 50% in order to encourage investment in the production of this metal in the United States.

The largest shareholder in Century is Glencore, a London-listed company. It provides Century with alumina as a feedstock to aluminium while purchasing nearly all its North American aluminum production for U.S. clients.

According to a US regulatory filing, it sold nine million of its 40,000,000 shares on November 10, for $272.25 millions and converted its entire Series A Convertible Preferential Stock into 4,95 million ordinary shares.

Confidence in Century's Management

Century's stock traded around $28 Monday, and has risen 80% in price since June. This is due to the soaring U.S. aluminum prices. The market had already priced in the tariffs and incentives needed by producers to continue shipping to the United States.

Glencore now holds 36 million shares of Century, which is a drop from its previous 43%. The commodity trader, miner and investor has owned a stake in Century since around 30 years.

Glencore stated in another regulatory filing that it was confident about Century's management and had "taken action to monetise a portion" of its investment.

Century is the United States' largest primary aluminum producer, producing 690 000 metric tons last year. The metal is used in construction, power and packaging industries.

According to Trade Data Monitor, the United States is heavily dependent on imports of aluminium, which amounted to 3,94 million tons last year.

Tariffs must be covered by producers in order to continue shipping aluminum to the United States.

The price of aluminium in the United States is determined by the London Metal Exchange benchmark plus a Midwest premium to cover costs like freight and taxes. LME aluminium reached $2,920, the highest price since May. This was partly due to tighter markets, while the U.S. Premium hit a record of 88.21 U.S. Cents per pound, or $1,944 per ton, last week. (Reporting and editing by Emelia Sithole Matarise; Pratima Dasai)

(source: Reuters)