Brazilian Rare Earths (BRE) has announced plans to demerge its 100%-owned Amargosa bauxite/gallium project in Brazil, into a newly formed ASX-listed company called Alurion Resources.
The proposed demerger is designed to establish Alurion as a dedicated bauxite and critical minerals development company with its own board, management team and capital structure, while enabling BRE to remain focused on advancing its rare earths and critical minerals portfolio.
BRE explains the move will afford Amargosa the focus and flexibility it needs to be progressed rapidly, while reflecting a disciplined portfolio strategy that separates two large-scale, strategically important mineral platforms with different development pathways.
Some benefits from the demerger include Alurion being able to raise and deploy capital directly for Amargosa’s development without competing with BRE’s other priorities and Alurion having a dedicated management team and board with relevant bauxite and bulk commodity logistics experience.
BRE shareholders are expected to receive direct Alurion exposure through an in-specie distribution and also retain indirect exposure through BRE’s strategic Alurion shareholding – BRE intends to retain about 17% of Alurion’s issued share capital, subject to the final initial public offering (IPO) size and allocations.
BRE intends to distribute Alurion shares to eligible BRE shareholders on a pro-rata basis of 0.5607 Alurion shares for each BRE share held. In turn, Alurion’s IPO is expected to raise between A$30-million and A$50-million.
The demerger comes at a time when the world’s seaborne bauxite supply chain has become increasingly concentrated, with Guinea now supplying about 70% of China’s imported bauxite feedstock.
Bauxite remains the primary raw material used to make alumina – which is then used to produce aluminium. The supply concentration, however, highlights the strategic importance for new, high-quality bauxite supply from reliable mining jurisdictions.
BRE affirms that Amargosa is not an early-stage concept since it has developed with more than a decade of exploration done by Rio Tinto and BRE. It has a defined 568-million-tonne resources, including 98-million tonnes of direct-ship bauxite grading 41.9% total available alumina and 2.5% reactive silica – which is competitive with Guinean benchmark metallurgical bauxite.
The first-stage scoping study on the project envisions mining and shipping bauxite directly without beneficiation or major fixed infrastructure. This pathway can minimise upfront capital intensity, reduce time to market and position Amargosa in the first quartile of the global cost curve.