South32 expects projects already under construction to drive higher production as it reshapes its portfolio around copper, zinc, silver, lead and manganese after an agreement to sell its aluminium assets to US aluminium producer Alcoa.
The miner expects projects already under construction to lift production by about 55% from its post-aluminium portfolio, with its Taylor zinc-lead-silver project in Arizona and the expansion of its Sierra Gorda copper mine in Chile providing much of the growth.
South32 told investors and analysts on Tuesday it expects to cut annual overhead costs by about $125m through a “simpler operating structure”, with the full savings expected from the 2029 financial year.
At Hermosa in Arizona, South32 expects the Taylor project to produce its first concentrate in the second half of the 2028 financial year. Taylor is expected to produce zinc, lead and silver over an initial mine life of about 33 years.
At Sierra Gorda, a copper mine in Chile in which South32 has a 45% interest, the company is developing a fourth grinding line expected to increase processing capacity by about 25%. First production from the expansion is expected in the middle of full-year 2030, with full production in full-year 2031. The company has increased the copper reserve at the Catabela deposit, extending the mine’s reserve life to 2045.
South32 said the expansion would cost about $725m and would be funded through operating cash flow and joint-venture debt.
The projects will increase South32’s exposure to copper and zinc. The company said it expects copper and zinc markets to face supply constraints over the next decade, driven by demand from electricity infrastructure, renewables, vehicles and other industrial uses.
South32 will retain its manganese operations in South Africa, including Wessels and Mamatwan in the Northern Cape.
The portfolio changes also reduce South32’s aluminium exposure in southern Africa. Hillside Aluminium in Richards Bay is among the assets being sold to Alcoa, while Mozal Aluminium in Mozambique is outside the transaction and remains on care and maintenance.
South32 placed Mozal on care and maintenance in March after it was unable to secure a new long-term electricity supply arrangement. The company has separately said it is considering options for the asset, including a potential divestment.
It is reducing functional support roles at its corporate centre in Perth, Australia, and giving individual operations greater responsibility for local decisions. The changes are expected to reduce annual overhead costs by about $125m from full-year 2029.
The aluminium transaction is expected to provide about $4.7bn in upfront cash proceeds. South32 said it was considering using some of the proceeds to repay $700m of senior unsecured notes.
The company said it would first use cash to fund its operations, maintain its balance sheet and pay for committed growth and mine-life extensions. Any remaining capital would be available for dividends, other shareholder returns, acquisitions and exploration.
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