South32 shareholders approve aluminium asset sale before new chapter

South32 Ltd said on Thursday its shareholders have endorsed its plan to sell its aluminium business, allowing the diversified base metals producer to embark on its "next phase of growth".

Shareholders voted for the disposal of aluminium value chain assets to Pittsburgh, Pennsylvania-based Alcoa Corp at an annual general meeting on Thursday. Alcoa is active in bauxite mining, alumina refining and aluminium production.

Early in July, South32 announced the Alcoa deal for an implied enterprise value of up to USD5.6 billion. The transaction is expected to complete in South32's second half of its 2027 financial year ending June 30. It is also subject to regulatory approvals.

At an AGM, South32 Chair Stephen Pearce told shareholders on Thursday that the aluminium move was a "step change" for the Perth, Australia-based company, repositioning it as an upstream base metals company with high-margin assets and "transformational" growth.

"And it will provide us with additional balance sheet flexibility to invest in our next phase of growth, while delivering shareholder returns," said Pearce, who took over the reigns as chair in March this year following the retirement of Karen Wood the previous month.

Hermosa has the potential to become a significant long-term producer of critical minerals across multiple deposits, Pearce said.

The Hermosa project, which is located in Arizona, is made up of the Taylor zinc-lead-silver deposit, the Clark zinc-lead-silver deposit, and a regional exploration land package.

Chief Executive Officer Matt Daley told shareholders in his maiden AGM address that the first component of the "pathway to transformational growth" is premised on copper and zinc.

A large part of that will come from Hermosa, Daley said. He became the new CEO from July after Graham Kerr stepped down.

"Earlier this year, an assessment of the Taylor project's milestones confirmed its potential to deliver attractive returns and its expected operating life increased by 5 years to 33 years," the new CEO said.

In April this year, South32 revised up its capital expenditure for this project to around USD3.3 billion from USD2.16 billion approved in February 2024. First production is now expected in the second half of the 2028 financial year, with the deadline extended from the second half of financial 2027.

At Sierra Gorda copper mine in Chile, South32 expects production growth of 5% in financial 2027 and a further 2% the following year, supported by higher planned copper grades.

At Cannington in Australia, South32 is investing to extend underground mine life and unlock value from its high-margin, silver-rich production, Daley said.

"We're also progressing study work for a potential open-pit development," he added.

In Alaska, the Ambler Metals joint venture offers high-grade copper and zinc options, the new chief said.

South32 shares were down 3.9% at ZAR52.00 each on Thursday afternoon in Johannesburg. In Sydney, its shares closed 5.7% lower at AUD4.47. In London, its shares were 3.4% lower at 236.80 pence each.

Alcoa shares were 1.0% lower in pre-market trading at USD39.70 each in New York.

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