South32 hunts for copper as it returns cash to shareholders

The miner is reshaping its portfolio since being spun off a decade ago from BHP to produce mostly base metals, and CEO Graham Kerr is, like many miners, keen to get his hands on more of the metal deemed key to the energy transition.

“We would love, in the ideal world, to buy a larger stake in Sierra Gorda because we see a lot of opportunity and potential there,” Kerr told Reuters in an interview.

South32 owns a stake of 45% in the northern Chilean mine with Poland’s KGHM, which has not so far indicated it is open to selling, he said. The mine produced 86,200 tonnes of copper last year.

KGHM said it was not engaged in talks with South32 and any such proposal would require discussion, but it treated the miner as a long-term partner.

Miners are having to become more aggressive to secure new projects or risk missing out, given the anticipated demand for the metal.

From existing operations, South32 expects to be able to quantify in the next year the size of copper potential around its Peak deposit in Arizona.

Manganese
South32 outlined a return to growth for its Australian manganese operations as it posted a drop of 59% in annual profit, beating market expectations, and said it would buy back shares worth $200 million.

The world’s biggest producer of manganese said it is working to restore its GEMCO operations in far north Australia that suffered major damage from a cyclone this year.

Kerr has said he would be open to buying out partner Anglo’s stake of 40% in GEMCO, as Anglo undergoes a restructure, but added on Thursday he was not in any talks to do so at the moment.

The company expects to produce about 1 million wet metric tons (wmt) of manganese in fiscal 2025 from its Australian operations before the figure rises to 3.2 million wmt in fiscal 2026.

Underlying profit at South32 for the reported period dropped to $380 million, from $916 million a year ago, but outstripped a Visible Alpha consensus estimate of $334.2 million.

“Overall they have done a bit better than people expected on production,” said Sudhir Kissun, an investment analyst at Allan Gray. Shares traded up 0.7% at A$3.1 as other miners slipped.

South32’s Illawarra metallurgical coal operations, recently sold for $1.65 billion to an Indonesian-led consortium, were hurt by lower realized prices and reduced shipments, leading to a fall in its underlying EBIT to $441 million from $714 million a year ago.

The miner said it aims to secure the necessary environmental approvals for its Worsley alumina development project by the end of 2024.

South32 declared a final dividend of 3.1 cents per share, compared with 3.2 cents a year earlier.