Credit: Shutterstock photoAlcoa Inc.AA announced that it has signed a letter of intent with the Danieli Group to commercialize its breakthrough Micromill technology. Under the letter of intent, Danieli will license Alcoa's intellectual property related to manufacturing advanced Micromill products.
According to the agreement, Alcoa and Danieli will work together toward selling Micromill equipment and licensing the patented Micromill technology. Alcoa will provide Danieli exclusive rights to sell Micromill equipment for a limited period of time. The companies will initially focus on Europe, South America, and Southeast Asia, and eventually bring the breakthrough aluminum sheet technology to customers across the globe.
Micromill alloy produced by Micromill technology is 40% more formable and 30% stronger than the conventional automotive aluminum. It is twice as formable and at least 30% lighter than high strength steel. The technology is also faster and reduces production time considerably. It cuts production time of 20 days taken by a traditional rolling mill to 20 minutes. The technology produces material with unrivalled characteristics, through a revolutionary manufacturing process.
Alcoa believes its partnership with Danieli will enable it to move from pilot plant to full-scale production, unlocking value for its shareholders and bringing high-tech metal to customers across the globe. Till date, Alcoa has Micromill qualification agreements with nine major automotive customers on three continents, including Ford Motor Co. F .
Additionally, Alcoa and Ford entered into an agreement wherein the latter selected Micromill material for its 2016 Ford F-150 truck. Alcoa further announced that it has entered into a joint development agreement with Ford to utilize next-generation aluminum alloys for automotive parts using Micromill technology. The expected use of Micromill material on Ford vehicles is anticipated to more than double from 2016 to 2017.
Alcoa currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Denison Mines Corp. DNN and OCI Resources LP OCIR , both carrying a Zacks Rank #2 (Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
