By Rhiannon Hoyle
South32 isn't currently in any detailed discussions to buy other assets, as it reshapes its portfolio with an up-to $5.6 billion sale of its aluminum business, the miner's chief executive officer said in an interview.
Matt Daley said South32 will "be opportunistic at the right time" in pursuing acquisitions, but that the company already has a lot of growth potential in its existing assets and that any future deals will need to be weighed against other options, including increasing shareholder returns.
Daley, who on Wednesday succeeded South32's CEO of more than 11 years, Graham Kerr, was speaking after South32 disclosed the sale of most of its bauxite, alumina and aluminum assets to Pittsburgh-based Alcoa. The miner also disclosed the final investment approval for a fourth grinding line to expand the Sierra Gorda copper mine in Chile.
"I can confirm that we have been very consumed by the aluminum value-chain transaction," Daley told The Wall Street Journal. "That's been the focus along with the fourth grinding line and running the business safely and stably, and we're currently in no other detailed discussions."
The deal with Alcoa simplifies South32's business, sharpening its focus on long-life, high-margin copper, zinc, silver and lead operations. After the deal is completed, copper--a metal highly sought after by miners because of rising demand linked to data centers and low-carbon technologies--will account for more than half the company's earnings, Daley said.
Jettisoning the aluminum assets also intensifies South32's focus on the Americas, which are expected to comprise more than half of earnings geographically once the deal is done.
The agreement with Alcoa didn't include the Mozal aluminum smelter in Mozambique that South32 idled in March after long-running talks to secure a new electricity supply agreement failed.
Speaking alongside Daley, Kerr said there were early talks to include Mozal in the deal but that ultimately "it didn't make a lot of sense to muddy the waters" given the asset is no longer operating. Kerr remains a strategic adviser to South32 to support the Alcoa deal, which is expected to close in the first half of 2027.
South Africa's state-owned Industrial Development Corp. and the government of Mozambique both own stakes in the Mozal smelter. Kerr said South32 is in talks with them about buying out its own 64% stake.
South32 has also "had interest from other people," he said. "So, depending on where our two partners land, then we'll make a decision about whether we go to market. But certainly we have an intent to test the market if they're not interested in buying it."
Daley, who joined South32 from giant miner Anglo American, said he thinks copper and zinc are "the right commodities to be in."
The demand prospects for the metals are supported by decarbonization, urbanization and the build-out of infrastructure needed for growth in artificial intelligence, he said. At the same time, growth in supply of the metals is being constrained by falling grades and lengthy permitting times, Daley added.
South32 has promised to pass about $500 million in Alcoa shares from its cash-and-stock deal onto shareholders once the deal completes, and to then consider any further potential returns.
Daley said South32 will want to maintain a strong balance sheet, and noted it has growth projects in the pipeline to consider, including in the U.S., Australia and Chile.
"We'll be very measured with how we think about [it] and make sure we do any capital allocation in line with shareholders' best interests," he said.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com