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(Bloomberg) — 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.
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“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’s 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.”
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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.
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“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.
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“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.
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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.
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