Diversified metals group South32 is returning a record $1.32bn (R22bn) to shareholders for its 2022 year, managing to more than quadruple its ordinary dividend as it cashed in on soaring prices and its latest acquisitions.
The shareholder return is about a tenth of the R235bn market value of the ASX and JSE-listed miner, whose profit jumped to a record $2.67bn in its year to end-June, from a loss of $195m previously.
South32 set production records at a number of its operations, including at Worsely Alumina in Australia and Hillside Aluminium in SA, while the group had also added copper to its portfolio, picking up a 45% stake in the Sierra Gorda copper mine in Chile in February.
Global commodity markets have been extremely volatile in 2022, much of this due to Russia’s invasion of Ukraine, with the group receiving higher prices for commodities including lead, zinc, aluminium, nickel and coal. This was only slightly offset by a lower price for silver.
The group’s ordinary dividend rocketed 363% to 22.7 US cents, while its special dividend climbed 50% to 3c.
Shareholder returns entail $1.05bn in ordinary dividends, a $139m special dividend, while it has also been pursuing share buybacks, saying on Thursday it expanded its capital management programme by $156m, leaving $250m to be returned by September 1 2023.
South32 has a primary listing in Australia and a secondary listing on the JSE, and was unbundled from BHP in 2015. The group completed the sale of its SA coal assets to Seriti in 2021, and has been on a drive to bulk up its footprint in green metals.
“We made significant progress transforming our portfolio, increasing our exposure to the metals critical to a low-carbon future,” CEO Graham Kerr said in the results.
“We added copper to our portfolio through the acquisition of a 45% interest in Sierra Gorda, and doubled our low-carbon aluminium capacity with an additional shareholding in the hydro-powered Mozal Aluminium smelter and the restart of our 100% renewable powered Brazil Aluminium smelter.”
“We are well positioned to navigate the current economic uncertainty. We have a strong balance sheet with net cash of $538m after funding our new investments during the year, while our ongoing focus on cost management and an expected 14% increase in production will mitigate industry-wide cost inflation,” Kerr said.
By the JSE’s close South32’s share price was up 1.65% to R50.63, having almost doubled over the past two years.
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