South32 (LSE:S32), in its quarterly report, said it had exceeded its full-year production guidance across several commodities, with aluminium output 1% above guidance, manganese 2% above guidance, and Cannington's zinc-lead-silver operation beating guidance by 2% after a 29% quarterly production increase.
Group sales volumes rose 15% in the fourth quarter as final Mozal Aluminium inventories were sold and rail access at Cannington recovered from weather disruption, driving an expected working capital unwind of around $200 million in the second half.
It also agreed to sell its aluminium value chain assets, excluding Mozal Aluminium, to Alcoa Corporation for an implied enterprise value of up to $5.6 billion, plus approximately $1.2 billion of related rehabilitation provisions. The transaction is expected to complete in the second half of financial year 2027.
Chief executive Matt Daley, who took over from Graham Kerr on 1 July, said the disposal sharpens South32's focus on high-margin, long-life assets in favourable jurisdictions.
"Our portfolio will be built around high-margin, long-life assets in favourable jurisdictions, with approximately 85% of pro-forma earnings from base and precious metals and approximately 55% production growth from approved projects," Daley said.
South32 invested approximately $710 million in its Hermosa project during the year, advancing construction of the Taylor zinc-lead-silver mine, which is now expected to deliver first production in the second half of financial year 2028 with steady-state EBITDA of around $650 million annually.
The Sierra Gorda joint venture approved a fourth grinding line expansion, expected to lift copper equivalent production by around 30% from financial year 2031.
Revised production guidance for Australia Manganese will accompany the company's full-year results, pending completion of work to manage elevated water volumes.
In London, South32 shares rose 4.9% to close Monday's session at 214p.
News Intelligence what this means for the company
South32 is divesting its aluminium operations (except Mozal) to Alcoa for up to $5.6bn in enterprise value, completing a strategic pivot toward base and precious metals under new CEO Matt Daley. The deal unlocks US$3.1bn of upfront cash while the company simultaneously advances high-return projects—Hermosa's Taylor mine targeting $650m annual EBITDA from H2 2028, and Sierra Gorda's 30% copper expansion from 2031—positioning South32 to derive ~85% of pro-forma earnings from base and precious metals.
- Alcoa Corporation becomes the buyer of South32's aluminium assets, absorbing the operational footprint outside Mozal.
The asset sale crystallizes value from a lower-margin asset class and funds growth in higher-return projects with long reserve lives in stable jurisdictions. Completion in H2 2027 leaves execution risk on Hermosa and Sierra Gorda timelines, but targeted overhead reductions of about US$125 million per year by fiscal year 2029 should improve group margins post-transition.
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