Swiss-based ARG International AG, the trading house set up by Glencore Plc's (GLEN.L) former No. 2 aluminium trader Matt Lucke, is buying a bankrupt smelter in the United States, its first acquisition since its founding nearly three years ago.
Noranda Aluminium Holding Corp (NORNQ.PK) said on Friday it sold its 263,000 tonne-per-year New Madrid primary aluminium smelter in Missouri to ARG for $13.7 million in a court-approved auction. Noranda filed for bankruptcy in February after struggling with a sharp downturn in aluminium prices CMAL3 amid a global glut.
Lucke founded ARG six months after leaving Glencore in the summer of 2013 alongside chief Gary Fegel, in a shakeup of the world's biggest aluminium trading desk. Many of Glencore's executives became paper millionaires after the firm's stock market listing in 2011.
At Glencore, Lucke helped run Century Aluminium (CENX.O), which was founded by Glencore and now counts the Swiss trade house and miner as its largest shareholder. Century is a rival of Noranda and operates three smelters in the United States and one in Iceland.
There are few examples in the metals industry of traders not backed by large companies buying production facilities, but it has happened with oil. Neal Shear, who helped build Morgan Stanley's (MS.N) commodity trading business during 25 years at the bank, purchased the ageing Come by Chance refinery in Newfoundland alongside veteran trader Kaushik Amin.
Lucke's purchase represents a bet on one of the few remaining U.S. smelters as producers struggle with low metal prices, high electricity costs and stiff competition from lower-cost producing regions like the Middle East and China.
The closure of many smelters means the United States, one of the world's biggest consumers of the metal, has to import more, helping to underpin premiums, which have remained fairly firm over the past year.
(Reporting By Luc Cohen; Editing by Cynthia Osterman)