South32 Ltd (ASX: S32) and Aluminium

Hi Peter,

A few moving parts to this answer but the divestment has led us to reconsider our position because it concentrates our exposure to the likes of copper, as opposed to aluminium.

As we wrote this week S32 – “South32 is evolving its commodities mix using aluminium, just as BHP is with iron ore,”  Alcoa simply allowed it to do so in the blink of an eye. Lets break down the deal and what it means for S32 moving forward.

South32 agreed to sell its bauxite, alumina and aluminium assets across Australia, Brazil and South Africa to Alcoa in a deal worth up to US$5.6bn, comprising US$3.1bn in cash, around US$1bn in Alcoa shares, assumed debt and lease liabilities, plus up to US$750m in contingent payments tied to commodity prices through 2030. As you say, Mozal Aluminium in Mozambique is excluded from the transaction.

• Hence shareholders do still have some Al exposure via the Alcoa shares and potential contingent payments.

We view the deal positively as it simplifies South32’s portfolio, removing long-term liabilities and it removes the short term risks around increased supply from Indonesia.

Before the sale, aluminium accounted for around 60% of South32’s earnings. Post-transaction, the company will be transformed into a base metals producer, with around 85% of pro-forma earnings expected to come from copper, zinc, silver and lead, significantly increasing its leverage to global electrification and infrastructure spending.

The key for MM is that S32 has improved the underlying quality of their commodities mix moving forward, we just have to decide if we are now over committed towards Copper, even though it’s our high conviction commodity call.

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South32 Ltd (S32)

LAST UPDATED 03/07/2026 10:52

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South32 Ltd (S32)

LAST UPDATED 03/07/2026 10:52