South32’s new CEO looks to focus on copper after aluminum deal

South32 Ltd. will focus on copper and zinc after selling off the aluminum business that accounted for 60% of earnings, with the disposal announced on chief executive officer Matt Daley’s first day in the role.

“We have 55% growth opportunities in copper and zinc in projects that are already approved and headed to execution,” Daley said in an interview after the Perth, Australia-based company’s deal with Alcoa Corp. was announced. “We have an exciting portfolio of organic opportunities,” he added. “Of course, we’re open to M&A deals, but we have a pretty high bar.”

Copper is a much-favored commodity at the moment, with the metal expected to benefit from its role as a building block for the energy transition, even as new mines get harder and more expensive to build. Benchmark prices posted a record close in London in May, and are up more than 6% this year.

“We’re really starting to focus capability on base metals: about 85% of our pro forma earnings will come from those commodities, mainly copper,” said Daley, who joined South32 in February as deputy CEO after leaving Anglo American Plc.

“By exiting the downstream smelting and refining business, and the aluminum value chain itself, it allows us to focus the business on technical capability, mine planning and processing,” he said.

The company will concentrate on its pipeline of copper assets, expanding the Sierra Gorda mine in Chile and bringing the Hermosa zinc-copper mine in the US into production next year, while also looking to make acquisitions, he said.

(By Paul-Alain Hunt and Julian Luk)