KEY POINTS
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South32’s $5.6bn aluminium assets sale to Alcoa remains on track for completion in the first half of 2027.
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South African manganese production reached 528,000 wet metric tonnes in the September quarter.
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Middle East attacks have disrupted aluminium supply, pushing the projected 2026 global market balance into a one-million-tonne deficit.
South32 has confirmed that the sale of its aluminium assets in South Africa, Australia and Brazil to US-based Alcoa Corporation remains on schedule for completion in the first half of 2027.
The mining company said the transaction, valued at up to $5.6 billion, is expected to be completed during the June 2027 half-year, according to its September quarterly report.
The deal includes South32’s Hillside Aluminium smelter and its idled Bayside smelter in South Africa, alongside its interests in bauxite mining, alumina refining and aluminium production facilities in Australia and Brazil.
The proposed sale is expected to transfer ownership of the assets to Alcoa, a major global producer operating across the aluminium value chain.
Hillside Aluminium maintains production
South32 reported that aluminium production remained largely unchanged during the three months to September 30, with its Hillside Aluminium operation in Richards Bay, KwaZulu-Natal, producing 179,000 tonnes.
The smelter continued testing its nameplate production capacity during the quarter.
The company also reported progress at its Brazil Aluminium operations, which remain in the ramp-up phase. Its Mozal Aluminium operation in Mozambique, however, remains under care and maintenance.
South32 had previously described Alcoa as well positioned to operate Hillside Aluminium over the long term following the signing of a binding conditional agreement for the sale.
Alcoa, headquartered in Pennsylvania, will also acquire South32’s interests in Australia’s Boddington bauxite mine and Worsley alumina refinery.
In Brazil, the transaction covers the Mineração Rio do Norte bauxite mine, as well as the Alumar alumina refinery and aluminium smelter.
South African manganese production increases
Beyond aluminium, South32 reported quarterly manganese production of 528,000 wet metric tonnes in South Africa.
The increase was supported by improved underground productivity at the Wessels mine in the Kalahari Basin, one of the world’s most important manganese-producing regions. The basin is estimated to contain about 80% of global manganese resources.
South32’s South Africa Manganese business operates two mines: the open-pit Mamatwan mine and the underground Wessels mine. Both form part of Hotazel Manganese Mines.
Mamatwan has been in operation for more than 50 years and uses terrace mining, while Wessels employs mechanised bord-and-pillar mining through a combination of vertical and inclined shafts.
The improved performance at Wessels contributed to the company’s manganese output during the reporting period.
Copper and zinc projects record progress
South32’s new chief executive, Matt Daley, also reported progress on the company’s copper and zinc development projects.
At the Sierra Gorda open-pit copper mine in northern Chile, payable copper-equivalent production increased by 11% during the quarter. The improvement was supported by higher planned copper grades.
The operation also paid a record quarterly distribution of $153 million.
South32 is advancing a fourth grinding line project at Sierra Gorda, which is expected to increase processing capacity by 25% and strengthen the company’s exposure to copper production.
In the United States, construction continued at the Hermosa project in Arizona, where South32 is developing underground and surface infrastructure for the Taylor zinc, lead and silver project.
The company also completed the federal permitting process for Taylor, marking another milestone in its development.
Hermosa contains several mineral deposits and exploration prospects, including the Clark oxide deposit, which contains zinc, manganese and silver, as well as the Peake and Flux prospects.
South32 said the project offers opportunities to apply underground mining and processing expertise gained from its Cannington operation in Queensland, Australia.
Cash position improves as guidance remains unchanged
South32’s net cash position increased by $14 million to $297 million during the September quarter.
The company maintained its production guidance for the 2027 financial year, indicating that its current operational outlook remains unchanged.
Its quarterly performance comes as it continues to reshape its portfolio through the proposed Alcoa transaction while advancing investments in copper, zinc and other growth opportunities.
Global aluminium market faces supply deficit
Developments in South32’s aluminium business are taking place against a challenging global market outlook.
Research firm Wood Mackenzie reported on October 22 that attacks in the Middle East had damaged two major aluminium smelters, disrupting almost 2% of global primary aluminium production.
The disruption is expected to push the 2026 market balance into a deficit of approximately one million tonnes.
Higher aluminium prices and premiums, alongside lower alumina costs, have encouraged producers in several markets to increase output and restart previously idle electrolytic cells.
Wood Mackenzie expects the market to return to a surplus in 2027 as prices moderate. However, it said the medium-term outlook remains supportive.
Faster-than-expected production expansion in Indonesia and a broader slowdown in economic activity were identified as the main risks to the market outlook.
The supply disruption could therefore provide support for aluminium prices in the near term, although the pace of new production and global economic conditions will remain important factors.
